PIMCO VARIABLE INSURANCE TRUST, 485APOS, 2000-01-31

PIMCO VARIABLE INSURANCE TRUST
485APOS, 2000-01-31

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<PAGE>

As filed with the Securities and Exchange Commission on January 31, 2000

File Nos. 333-37115
811-8399

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

Registration Statement Under the Securities Act of 1933 /X/

Post-Effective Amendment No. 5 /X/

and

Registration Statement Under the Investment Compay Act of 1940 /X/

Amendment No. 7 /X/

PIMCO VARIABLE INSURANCE TRUST
-----------------------------------------------
(Exact Name of Registrant as Specified in Charter)

840 Newport Center Drive
Newport Beach, California 92660
-------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code:
(714) 760-4867

<TABLE>
<CAPTION>
<S> <C>
Robert W. Helm, Esq. R. Wesley Burns
Dechert Price & Rhoads Pacific Investment Management Company
1775 Eye Street, N.W. 840 Newport Center Drive, Suite 300
Washington, D.C. 20006 Newport Beach, California 92660
</TABLE>

(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box):

<TABLE>
<CAPTION>
<S> <C>
/ / Immediately upon filing pursuant to paragraph (b) / / On (date) pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a)(1) / / On (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2) / / On April 30, 1999 pursuant to paragraph (a)(2)
of Rule 485
</TABLE>

If appropriate, check the following box:

/ / This post-effective amendment designates a new effective date for a
previously-filed post-effective amendment.

1
<PAGE>

[LOGO]

PIMCO
Variable
Insurance
Trust
Short Duration Bond Portfolios
Money Market Portfolio
Short-Term Bond Portfolio
Low Duration Bond Portfolio

Intermediate Duration Bond Portfolios
Real Return Bond Portfolio
Total Return Bond Portfolio
Total Return Bond Portfolio II
High Yield Bond Portfolio

Long Duration Bond Portfolios
Long-Term U.S. Government Bond Portfolio

International Bond Portfolios
Global Bond Portfolio
Foreign Bond Portfolio
Emerging Markets Bond Portfolio

Stock and Bond Portfolios
Strategic Balanced Portfolio

Stock Portfolios
StocksPLUS Growth and Income Portfolio

Prospectus

- --------------------------------------------------------------------------------
This cover is not part of the Prospectus. April __, 2000
<PAGE>

PIMCO Variable Insurance Trust

Prospectus

April __, 2000

PIMCO Variable Insurance Trust (the "Trust"), consisting of thirteen separate
investment portfolios (the "Portfolios"), is designed to provide access to the
professional investment management services offered by Pacific Investment
Management Company ("PIMCO"). Each Portfolio has its own investment objective
and strategies and its own risk/reward profile, which are described in this
Prospectus. The investments made by the Portfolios at any given time are not
expected to be the same as those made by other mutual funds for which PIMCO acts
as investment adviser, including mutual funds with investment objectives and
strategies similar to those of the Portfolios. Accordingly, the performance of
the Portfolios can be expected to vary from that of the other mutual funds.

This Prospectus gives vital information you should know before investing in the
Portfolios. For your own benefit and protection, please read it before you
invest and keep it for future reference.

Shares of the Portfolios currently are sold to segregated asset accounts
("Separate Accounts") of insurance companies which fund variable annuity
contracts and variable life insurance policies ("Variable Contracts"). Assets
in the Separate Account are invested in shares of the Portfolios in accordance
with allocation instructions received from owners of the Variable Contracts
("Variable Contract Owners"). Variable Contract Owners do not deal directly
with the Portfolios to purchase or redeem shares. The allocation rights of
Variable Contract Owners are described in the accompanying Separate Account
prospectus. Shares of the Portfolios also may be sold to qualified pension and
retirement plans outside of the separate account context.

This Prospectus should be read in conjunction with the prospectus of the
Separate Account. Both prospectuses should be read carefully and retained for
future reference.

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.

1 PIMCO Variable Insurance Trust
<PAGE>

<TABLE>
TABLE OF CONTENTS
<S> <C>
Summary Information........................................................ 3
Portfolio Summaries........................................................ 7
Money Market Portfolio.................................................. 7
Short-Term Bond Portfolio............................................... 9
Low Duration Bond Portfolio............................................. 10
Real Return Bond Portfolio.............................................. 11
Total Return Bond Portfolio............................................. 13
Total Return Bond Portfolio II.......................................... 15
High Yield Bond Portfolio............................................... 17
Long-Term U.S. Government Bond Portfolio................................ 19
Global Bond Portfolio................................................... 21
Foreign Bond Portfolio.................................................. 23
Emerging Markets Bond Portfolio......................................... 25
Strategic Balanced Portfolio............................................ 27
StocksPLUS Growth and Income Portfolio.................................. 29
Summary of Principal Risks
Management of the Portfolios............................................... 39
Investment Adviser and Administrator..................................... 39
Advisory and Administrative Fees......................................... 42
Portfolio Transactions................................................... 42
Purchases and Redemptions.................................................. 43
How Portfolio Shares are Priced............................................ 44
Tax Consequences........................................................... 44
Characteristics and Risks of Securities and Investment Techniques.......... 45
Financial Highlights....................................................... 51
Other Information.......................................................... 52
Appendix A................................................................. A-1

</TABLE>
<PAGE>

Summary Information

The table below compares certain investment characteristics of the Portfolios.
Other important characteristics are described in the individual Portfolio
Summaries beginning on page 5. Following the table are certain key concepts
which are used throughout the prospectus.

<TABLE>
<CAPTION>
Non-U.S. Dollar
Denominated
Main Investments Duration Credit Quality(1) Securities (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short Duration Bond Portfolios
- ------------------------------
Money Market Money market instruments less than or Min 95% Aaa or 0%
equal to 90 days Prime 1; less than
dollar-weighted or equal to 5%
average maturity Aa or Prime 2

Short-Term Bond Money market instruments and short 0-1 year B to Aaa; max 10% 0-5% (3)
maturity fixed income securities below Baa

Low Duration Bond Short maturity fixed 1-3 years B to Aaa; max 10% 0-20% (3)
income securities below Baa

Intermediate Duration Bond
Portfolios
- ----------
Real Return Bond Inflation-indexed fixed income securities N/A B to Aaa; max 10% 0-35% (3)
below Baa

Total Return Bond Intermediate maturity fixed income 3-6 years B to Aaa; max 10% 0-20% (3)
securities below Baa

Total Return Bond II Intermediate maturity fixed income 3-6 years Baa to Aaa 0%
securities with quality and foreign issuer
restrictions

High Yield Bond Higher yielding fixed income securities 2-6 years B to Aaa; min 65% 0-15% (4)
below Baa

Long Duration Bond Portfolios
- -----------------------------
Long-Term U.S. Government Long-term maturity fixed income securities less than A to Aaa 0%
or equal to
8 years

International Bond Portfolios
- -----------------------------
Global Bond U.S. and non-U.S. intermediate maturity 3-7 years B to Aaa; max 10% 25-75%(5)
fixed income securities below Baa

Foreign Bond Intermediate maturity hedged non-U.S. 3-7 years B to Aaa; max 10% less than
fixed income securities below Baa or equal
to 85%(5)

Emerging Markets Bond Emerging market fixed income 0-8 years B to Aaa less than
securities or equal
to 80%(5)
Stock and Bond Portfolios
- -------------------------
Strategic Balanced Intermediate maturity fixed income 0-6 years B to Aaa; max 10% 0-20%(3)
securities and S&P 500 stock index below Baa
derivatives

Stock Portfolios
- ----------------
StocksPLUS Growth and S&P 500 stock index derivatives backed 0-1 year B to Aaa; max 10% 0-20%(3)
Income by a portfolio of short-term fixed income below Baa
securities
</TABLE>

3 PIMCO Variable Insurance Trust
<PAGE>

- ---------------
(1) As rated by Moody's Investors Service, Inc., or equivalently rated by
Standard & Poor's Ratings Services, or if unrated, determined to be of
comparable quality. For specific information concerning the credit quality
of the securities held by each Portfolio, see that Portfolio's description
of Main Investment Strategies.

(2) Each Portfolio (except the Total Return Bond II and Long-Term U.S.
Government Portfolios) may invest beyond this limit in U.S. dollar-
denominated securities.

(3) The percentage limitation relates to non-U.S. dollar-denominated
securities.

(4) The percentage limitation relates to euro-denominated securities.

(5) The percentage limitation relates to securities of foreign issuers,
denominated in any currency.

Prospectus 4
<PAGE>

Summary Information (continued)

Fixed Income Instruments

The "Fixed Income Portfolios" are the Money Market, Short-Term Bond, Low
Duration Bond, Real Return Bond, Total Return Bond, Total Return Bond II, High
Yield Bond, Long-Term U.S. Government, Global Bond, Foreign Bond and Emerging
Markets Bond Portfolios. Each of the Fixed Income Portfolios differs from the
others primarily in the length of the Portfolio's duration or the proportion of
its investments in certain types of fixed income securities. Each Fixed Income
Portfolio invests at least 65% of its assets in "Fixed Income Instruments,"
which as used in this Prospectus includes:

. securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government Securities");
. corporate debt securities of U.S. and non-U.S. issuers, including
convertible securities and corporate commercial paper;
. mortgage-backed and other asset-backed securities;
. inflation-indexed bonds issued both by governments and corporations;
. structured notes, including hybrid or "indexed" securities, event-linked
bonds and loan participations;
. delayed funding loans and revolving credit facilities;
. bank certificates of deposit, fixed time deposits and bankers'
acceptances;
. repurchase agreements and reverse repurchase agreements;
. debt securities issued by states or local governments and their agencies,
authorities and other instrumentalities;
. obligations of non-U.S. governments or their subdivisions, agencies and
instrumentalities; and
. obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is
used to determine the sensitivity of a security's price to changes in interest
rates. The longer a security's duration, the more sensitive it will be to
changes in interest rates. Similarly, a Portfolio with a longer average
portfolio duration will be more sensitive to changes in interest rates than a
Portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities
which measure an issuer's expected ability to pay principal and interest on
time. Credit ratings are determined by rating organizations, such as Standard &
Poor's Rating Service ("S&P") or Moody's Investors Service, Inc. ("Moody's").
The following terms are generally used to describe the credit quality of debt
securities depending on the security's credit rating or, if unrated, credit
quality as determined by PIMCO:

. high quality
. investment grade
. below investment grade ("high yield securities" or "junk bonds")

For a further description of credit ratings, see "Appendix A--Description of
Securities Ratings."

Portfolio Descriptions, Performance and Fees

The Portfolios provide a broad range of investment choices. The following
summaries identify each Portfolio's investment objective, principal investments
and strategies, principal risks, performance information and fees and expenses.
A more detailed "Summary of Principal Risks" describing principal risks of
investing in the Portfolios begins after the Portfolio Summaries.

It is possible to lose money on investments in the Portfolios. An investment in
a Portfolio is not a deposit of a bank and is not guaranteed or insured by the
Federal Deposit Insurance Corporation or any other government agency.

5 PIMCO Variable Insurance Trust
<PAGE>

PIMCO Money Market Portfolio

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum current Money market instruments Minimum 95% rated Aaa
income, consistent with or Prime 1; less than
preservation of capital Average Portfolio Maturity or equal to 5% Aa or
and daily liquidity Less than or equal to Prime 2
90 days dollar-weighted
average maturity Dividend Frequency
Declared daily and
distributed monthly

The Portfolio seeks to achieve its investment objective by investing at least
95% of its total assets in a diversified portfolio of money market securities
that are in the highest rating category for short-term obligations. The
Portfolio also may invest up to 5% of its total assets in money market
securities that are in the second-highest rating category for short-term
obligations. The Portfolio may only invest in U.S. dollar-denominated securities
that mature in 397 days or fewer from the date of purchase. The dollar-weighted
average portfolio maturity of the Portfolio may not exceed 90 days. The
Portfolio attempts to maintain a stable net asset value of $1.00 per share,
although there is no assurance that it will be successful in doing so.

The Portfolio may invest in the following: obligations of the U.S.
Government (including its agencies and instrumentalities); short-term corporate
debt securities of domestic and foreign corporations; obligations of domestic
and foreign commercial banks, savings banks, and savings and loan associations;
and commercial paper. The Portfolio may invest more than 25% of its total assets
in securities or obligations issued by U.S. banks. The Portfolio may lend its
portfolio securities to brokers, dealers and other financial institutions in
order to earn income.

The Portfolio's investments will comply with applicable rules governing the
quality, maturity and diversification of securities held by money market funds.

- --------------------------------------------------------------------------------
Principal Risks

An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Portfolio seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Portfolio. Among the principal
risks of investing in the Portfolio, which could adversely affect its net asset
value, yield and total return, are:

. Interest Rate Risk . Market Risk
. Credit Risk . Issuer Risk
. Management Risk

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

- --------------------------------------------------------------------------------
Performance Information

Performance information for this Portfolio is not provided because it has not
been in operation for a full calendar year.

Prospectus 6
<PAGE>

PIMCO Money Market Portfolio (continued)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.15% None 0.22% 0.37% (0.02%) 0.35%
- ---------------------------------------------------------------------------------------------------------------------------
Administrative 0.15% 0.15% 0.22% 0.52% (0.02%) 0.50%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.20% administrative fee paid by the class.
"Other Expenses" are based on estimates for the current fiscal year.

** PIMCO has agreed to reduce its administrative fee, subject to potential
future reimbursement, to the extent that total Portfolio operating expenses for
the Institutional Class and Administrative Class shares would exceed, due to
organizational expenses and the payment by the Portfolio of its pro rata portion
of the Trust's Trustees' fees, 0.35% and 0.50%, respectively, of average daily
net assets.

Examples. The Examples are intended to help you compare the cost of investing in
Institutional Class or Administrative Class shares of the Portfolio with the
costs of investing in other mutual funds. The Examples assume that you invest
$10,000 in the noted class of shares for the time periods indicated, and then
redeem all your shares at the end of those periods. The Examples also assume
that your investment has a 5% return each year, the reinvestment of all
dividends and distributions, and that the Portfolio's operating expenses remain
the same. Although your actual costs may be higher or lower, the Examples show
what your costs would be based on these assumptions.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3
- --------------------------------------------------------------
<S> <C> <C>
Institutional $ [_________] $ [_________]
- --------------------------------------------------------------
Administrative 51 160
- --------------------------------------------------------------
</TABLE>

7 PIMCO Variable Insurance Trust
<PAGE>

PIMCO Short-Term Portfolio

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum current Money market instruments and B to Aaa; maximum
income, consistent with short maturity fixed income 10% below Baa
preservation of capital securities
and daily liquidity Dividend Frequency
Average Portfolio Duration Declared daily and
0-1 year distributed monthly

The Portfolio seeks to achieve its investment objective by investing under
normal circumstances at least 65% of its assets in a diversified portfolio of
Fixed Income Instruments of varying maturities. The average portfolio duration
of this Portfolio normally does not exceed one year. For point of reference, the
dollar-weighted average portfolio maturity of this Portfolio is normally not
expected to exceed three years.

The Portfolio invests primarily in investment grade debt securities, but
may invest up to 10% of its assets in high yield securities ("junk bonds") rated
B or higher by Moody's or S&P, or, if unrated, determined by PIMCO to be of
comparable quality. The Portfolio may invest up to 5% of its assets in
securities denominated in foreign currencies, and may invest beyond this limit
in U.S. dollar-denominated securities of foreign issuers. The Portfolio will
normally hedge at least 75% of its exposure to foreign currency to reduce the
risk of loss due to fluctuations in currency exchange rates.

- --------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could
adversely affect its net asset value, yield and total return, are:

. Interest Rate Risk . Issuer Risk . Leveraging Risk
. Credit Risk . Derivatives Risk . Management Risk
. Market Risk . Mortgage Risk

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

- --------------------------------------------------------------------------------
Performance Information

Performance information for this Portfolio is not provided because it has not
been in operation for a full calendar year.

Prospectus 8
<PAGE>

PIMCO Short-Term Portfolio (continued)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.25% None 0.22% 0.47% (0.02%) 0.45%
- ---------------------------------------------------------------------------------------------------------------------------
Administrative 0.25% 0.15% 0.22% 0.62% (0.02%) 0.60%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.20% administrative fee paid by the class.
"Other Expenses" are based on estimates for the current fiscal year.

** PIMCO has agreed to reduce its administrative fee, subject to potential
future reimbursement, to the extent that total Portfolio operating expenses for
the Institutional Class and Administrative Class shares would exceed, due to
organizational expenses and the payment by the Portfolio of its pro rata portion
of the Trust's Trustees' fees, 0.45% and 0.60%, respectively, of average daily
net assets.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3
- -----------------------------------------------------------------------
<S> <C> <C>
Institutional $ [_________] $ [_________]
- -----------------------------------------------------------------------
Administrative 61 192
- -----------------------------------------------------------------------
</TABLE>

9 PIMCO Variable Insurance Trust
<PAGE>

PIMCO Low Duration Portfolio

- -------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum total return, Short maturity fixed B to Aaa; maximum
consistent with preservation income securities 10% below Baa
of capital and prudent
investment management Average Portfolio Duration Dividend Frequency
1-3 years Declared daily and
distributed monthly

The Portfolio invests primarily in investment grade debt securities, but
may invest up to 10% of its assets in high yield securities ("junk bonds") rated
B or higher by Moody's or S&P, or, if unrated, determined by PIMCO to be of
comparable quality. The Portfolio may invest up to 20% of its assets in
securities denominated in foreign currencies, and may invest beyond this limit
in U.S. dollar-denominated securities of foreign issuers. The Portfolio will
normally hedge at least 75% of its exposure to foreign currency to reduce the
risk of loss due to fluctuations in currency exchange rates.

The Portfolio may invest all of its assets in derivative instruments, such
as options, futures contracts or swap agreements, or in mortgage- or asset-
backed securities. The Portfolio may lend its portfolio securities to brokers,
dealers and other financial institutions to earn income. Rather than investing
directly in the securities in which it primarily invests, the Portfolio may use
other investment techniques to gain exposure to market movements related to such
securities, such as entering into a series of contracts to buy or sell such
securities. The "total return" sought by the Portfolio consists of income earned
on the Portfolio's investments, plus capital appreciation, if any, which
generally arises from decreases in interest rates or improving credit
fundamentals for a particular sector or security.

- --------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely
affect its net asset value, yield and total return, are:

. Interest Rate Risk . Derivatives Risk . Currency Risk
. Credit Risk . Liquidity Risk . Leveraging Risk
. Market Risk . Mortgage Risk . Management Risk
. Issuer Risk . Foreign Investment Risk

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

- --------------------------------------------------------------------------------
Performance Information

Performance information for this Portfolio is not provided because it has not
been in operation for a full calendar year.

Prospectus 10
<PAGE>

PIMCO Low Duration Portfolio (continued)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.25% None 0.27% 0.52% (0.02%) 0.50%
Administrative 0.25% 0.15% 0.27% 0.67% (0.02%) 0.65%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.25% administrative fee paid by the class.
"Other Expenses" are based on estimates for the current fiscal year.

** PIMCO has agreed to reduce its administrative fee, subject to potential
future reimbursement, to the extent that total Portfolio operating expenses of
the Institutional Class and Administrative Class shares would exceed, due to
organizational expenses and the payment by the Portfolio of its pro rata portion
of the Trust's Trustees' fees, 0.50% and 0.65%, respectively, of average daily
net assets.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3
- ------------------------------------------------------------------------------
<S> <C> <C>
Institutional $ [_________] $ [_________]
- ------------------------------------------------------------------------------
Administrative 66 208
- ------------------------------------------------------------------------------
</TABLE>

11 PIMCO Variable Insurance Trust
<PAGE>

PIMCO Real Return Bond Portfolio

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum real return, Inflation indexed B to Aaa; maximum
consistent with preservation fixed income securities 10% below Baa
of real capital and prudent
investment management Average Portfolio Duration Dividend Frequency
See description below Declared daily and
distributed monthly

The Portfolio seeks its investment objective by investing under normal
circumstances at least 65% of its assets in inflation-indexed bonds of varying
maturities issued by the U.S. and non-U.S. governments, their agencies or
instrumentalities, and corporations. Inflation-indexed bonds are fixed income
securities that are structured to provide protection against inflation. The
value of the bond's principal or the interest income paid on the bond is
adjusted to track changes in an official inflation measure. The U.S. Treasury
uses the Consumer Price Index for Urban Consumers as the inflation measure.
Inflation-indexed bonds issued by a foreign government are generally adjusted to
reflect a comparable inflation index, calculated by that government. "Real
return" is a measure of the change in purchasing power of money invested in a
particular instrument after adjusting for inflation.

Because of the unique features of inflation-indexed bonds, PIMCO uses a
modified form of duration for the Portfolio ("real duration") which measures
price changes as a result of changes in "real" interest rates. A "real" interest
rate is the market interest rate minus expected inflation. There is no limit on
the real duration of the Portfolio, but it is expected that the average real
duration of this Portfolio will normally vary approximately within the range of
the average real duration of all inflation-indexed bonds issued by the U.S.
Treasury in the aggregate, which as of January 21, 2000 was 9.2 years. For point
of reference, it is expected that the average portfolio duration (as opposed to
real duration) of the Portfolio will generally vary within a one- to five-year
time frame, although this range is subject to change. The Portfolio may invest
in fixed income securities of any maturity.

The Portfolio invests primarily in investment grade securities, but may
invest up to 10% of its assets in high yield securities ("junk bonds") rated B
or higher by Moody's or S&P, or, if unrated, determined by PIMCO to be of
comparable quality. The Portfolio may invest up to 35% of its assets in non-
inflation indexed Fixed Income Instruments. The Portfolio also may invest up to
35% of its assets in securities denominated in foreign currencies, and may
invest beyond this limit in U.S. dollar denominated securities of foreign
issuers. The Portfolio will normally hedge at least 75% of its exposure to
foreign currency to reduce the risk of loss due to fluctuations in currency
exchange rates. The Portfolio is non-diversified, which means that it may
concentrate its assets in a smaller number of issuers than a diversified
Portfolio.

- ------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely
affect its net asset value, yield and total return, are:

. Interest Rate Risk . Derivatives Risk . Currency Risk
. Credit Risk . Liquidity Risk . Leveraging Risk
. Market Risk . Concentration Risk . Management Risk
. Issuer Risk . Foreign Investment Risk

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

- ------------------------------------------------------------------------------
Performance Information

Performance information for this Portfolio is not provided because it
has not been in operation for a full calendar year.

Prospectus 12
<PAGE>

PIMCO Real Return Bond Portfolio (continued)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.25% None 0.27% 0.52% (0.02%) 0.50%
- ---------------------------------------------------------------------------------------------------------------------------
Administrative 0.25% 0.15% 0.27% 0.67% (0.02%) 0.65%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.25% administrative fee paid by the class.
"Other Expenses" are based on estimates for the current fiscal year.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3
- ----------------------------------------------------------
<S> <C> <C>
Institutional $ [_________] $ [_________]
- ----------------------------------------------------------
Administrative 66 208
- ----------------------------------------------------------
</TABLE>

13 PIMCO Variable Insurance Trust
<PAGE>

PIMCO Total Return Portfolio

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum total return, Intermediate maturity B to Aaa; maximum
consistent with preservation fixed income securities 10% below Baa
of capital and prudent
investment management Average Portfolio Duration Dividend Frequency
3-6 years Declared daily and
distributed monthly

The Portfolio invests primarily in investment grade debt securities, but
may invest up to 10% of its assets in high yield securities ("junk bonds") rated
B or higher by Moody's or S&P or, if unrated, determined by PIMCO to be of
comparable quality. The Portfolio may invest up to 20% of its assets in
securities denominated in foreign currencies, and may invest beyond this limit
in U.S. dollar-denominated securities of foreign issuers. The Portfolio will
normally hedge at least 75% of its exposure to foreign currency to reduce the
risk of loss due to fluctuations in currency exchange rates.

- --------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely
affect its net asset value, yield and total return, are:

. Interest Rate Risk . Derivatives Risk . Currency Risk
. Credit Risk . Liquidity Risk . Leveraging Risk
. Market Risk . Mortgage Risk . Management Risk
. Issuer Risk . Foreign Investment Risk

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

- --------------------------------------------------------------------------------
Performance Information

The top of the next page shows summary performance information for the Portfolio
in a bar chart and an Average Annual Total Returns table. The information
provides some indication of the risks of investing in the Portfolio by showing
changes in its performance from year to year and by showing how the Portfolio's
average annual returns compare with the returns of a broad-based securities
market index. The bar chart and the information to its right show performance of
the Fund's Administrative Class Shares. The bar chart and table do not reflect
Variable Contract fees and expenses. If they did, performance would have been
lower. No performance information has been provided for Institutional Class
shares because they were not offered prior to the date of this Prospectus. For
the same periods, Institutional Class shares would have had higher annual
returns than Administrative Class shares, even though they are invested in the
same portfolio of securities, because Institutional Class shares pay lower total
annual operating expenses. Past performance is no guarantee of future results.

Prospectus 14
<PAGE>

PIMCO Total Return Portfolio (continued)

Calendar Year Total Returns -- Administrative Class
LOGO

Highest and Lowest Quarter Returns
(for periods shown in the bar chart)
------------------------------------
HIghest (3rd Qtr. '98) 5.43%
------------------------------------
Lowest (1st Qtr. '99) -0.85%

Calendar Year End (through 12/31)

<TABLE>
<CAPTION>
Average Annual Total Returns (for periods ended 12/31/99)
- --------------------------------------------------------------------
1 Year 5 Years 10 Years
- --------------------------------------------------------------------
<S> <C> <C> <C>
Administrative Class 9.48% N/A N/A
- --------------------------------------------------------------------
Lehman Aggregate Bond Index(1) 8.69% N/A N/A
- --------------------------------------------------------------------
</TABLE>

(1) The Lehman Brothers Aggregate Bond Index is an unmanaged index of investment
grade, U.S. dollar-denominated fixed income securities of domestic issuers
having a maturity greater than one year. It is not possible to invest
directly in the index.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.25% None 0.35% 0.60% (0.10%) 0.50%
- ----------------------------------------------------------------------------------------------------------------------------
Administrative 0.25% 0.15% 0.35% 0.75% (0.10%) 0.65%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.25% administrative fee paid by the class.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $ $ $
- ------------------------------------------------------------------------
Administrative 66 208 362 810
- ------------------------------------------------------------------------
</TABLE>

15 PIMCO Variable Insurance Trust
<PAGE>

PIMCO Total Return Portfolio II

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum total return, Intermediate maturity fixed Baa to Aaa
consistent with preservation income securities
of capital and prudent Dividend Frequency
investment management Average Portfolio Duration Declared daily
3-6 years and distributed
monthly

The Portfolio seeks to achieve its investment objective by investing under
normal circumstances at least 65% of its assets in a diversified portfolio of
Fixed Income Instruments of varying maturities. The average portfolio duration
of this Portfolio normally varies within a three- to six-year time frame based
on PIMCO's forecast for interest rates. The Portfolio may invest only in U.S.
dollar denominated securities of U.S. issuers that are rated at least Baa by
Moody's or BBB by S&P, or, if unrated, determined by PIMCO to be of comparable
quality.

- --------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely
affect its net asset value, yield and total return, are:

. Interest Rate Risk . Issuer Risk . Leveraging Risk
. Credit Risk . Derivatives Risk . Management Risk
. Market Risk . Mortgage Risk

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

- --------------------------------------------------------------------------------
Performance Information

Performance information for this Portfolio is not provided because it has not
been in operation for a full calendar year.

Prospectus 16
<PAGE>

PIMCO Total Return Portfolio II (continued)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.25% None 0.27% 0.52% N/A 0.50%
- ---------------------------------------------------------------------------------------------------------------------------
Administrative 0.25% 0.15% 0.27% 0.67% (0.02%) 0.65%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.25% administrative fee paid by the class.
"Other Expenses" are based on estimates for the current fiscal year.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3
- --------------------------------------------------------------------------------
<S> <C> <C>
Institutional $ [________] $ [________]
- --------------------------------------------------------------------------------
Administrative $66 $208
- --------------------------------------------------------------------------------
</TABLE>

17 PIMCO Variable Insurance Trust

<PAGE>

PIMCO High Yield Portfolio

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum total return, Higher yielding fixed income B to Aaa; minimum
consistent with preservation securities 65% below Baa
of capital and prudent
investment management Average Portfolio Duration Dividend Frequency
2-6 years Declared daily and
distributed monthly

The Portfolio seeks to achieve its investment objective by investing under
normal circumstances at least 65% of its assets in a diversified portfolio of
high yield securities ("junk bonds") rated below investment grade but rated at
least B by Moody's or S&P, or, if unrated, determined by PIMCO to be of
comparable quality. The remainder of the Portfolio's assets may be invested in
investment grade Fixed Income Instruments. The average portfolio duration of
this Portfolio normally varies within a two- to six-year time frame based on
PIMCO's forecast for interest rates. The Portfolio may invest up to 15% of its
assets in euro-denominated securities, and may invest without limit in U.S.
dollar-denominated securities of foreign issuers. The Portfolio will normally
hedge at least 75% of its exposure to the euro to reduce the risk of loss due to
fluctuations in currency exchange rates.

The Portfolio may invest up to 15% of its assets in derivative instruments,
such as options, futures contracts or swap agreements, or in mortgage- or asset-
backed securities. The Portfolio may lend its portfolio securities to brokers,
dealers, and other financial institutions to earn income. Rather than investing
directly in the securities in which it primarily invests, the Portfolio may use
other investment techniques to gain exposure to market movements related to such
securities, such as entering into a series of contracts to buy or sell such
securities. The "total return" sought by the Portfolio consists of income earned
on the Portfolio's investments, plus capital appreciation, if any, which
generally arises from decreases in interest rates or improving credit
fundamentals for a particular sector or security.

- --------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely
affect its net asset value, yield and total return, are:

. Interest Rate Risk . Issuer Risk . Foreign Investment Risk
. Credit Risk . Liquidity Risk . Currency Risk
. High Yield Risk . Derivatives Risk . Leveraging Risk
. Market Risk . Mortgage Risk . Management Risk

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

- --------------------------------------------------------------------------------
Performance Information

Prospectus 18
<PAGE>

PIMCO High Yield Portfolio (continued)

Calendar Year Total Returns -- Administrative Class
LOGO

Highest and Lowest Quarter Returns
------------------------------------
(for periods shown in the bar chart)
------------------------------------
Highest (3rd Qtr. '98) 5.43%
------------------------------------
Lowest (1st Qtr. '99) -0.85%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/99)

1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
Administrative Class [ ]% N/A N/A
- --------------------------------------------------------------------------------
Lehman Brothers BB Intermediate
Corporate Index(1) 5.74% N/A N/A
- --------------------------------------------------------------------------------

(1) The Lehman Brothers BB Intermediate Corporate Index is an unmanaged index
comprised of various fixed income securities rated BB. It is not possible to
invest directly in the index.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.25% None 0.41% 0.66% (0.6%) 0.60%
- ---------------------------------------------------------------------------------------------------------------------------
Administrative 0.25% 0.15% 0.41% 0.81% (0.06%) 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.35% administrative fee paid by the class.

** PIMCO has agreed to reduce its administrative fee, subject to potential
future reimbursement, to the extent that total Portfolio operating expenses of
the Institutional Class and Administrative Class shares would exceed, due to
organizational expenses and the payment by the Portfolio of its pro rata portion
of the Trust's Trustees' fees, 0.60% and 0.75%, respectively, of average daily
net assets.

Share Class Year 1 Year 3 Year 5 Year 10
- --------------------------------------------------------------------------------
Institutional $ $ $
- --------------------------------------------------------------------------------
Administrative 77 240 417 930
- --------------------------------------------------------------------------------

19 PIMCO Variable Insurance Trust

<PAGE>

PIMCO Long-Term U.S. Government Portfolio

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum total return, Long-term maturity fixed A to Aaa
consistent with preservation income securities
of capital and prudent Dividend Frequency
investment management Average Portfolio Duration Declared daily and
Greater than or equal to distributed monthly
8 years

The Portfolio seeks to achieve its investment objective by investing under
normal circumstances at least 65% of its assets in a diversified portfolio of
fixed income securities that are issued or guaranteed by the U.S. Government,
its agencies or government-sponsored enterprises ("U.S. Government Securities").
Additionally, the Portfolio may obtain exposure to U.S. Government Securities
through the use of futures contracts (including related options) with respect to
such securities, and options on such securities, when PIMCO deems it appropriate
to do so. While PIMCO may invest in derivatives at any time it deems
appropriate, it will generally do so when it believes that U.S. Government
Securities are overvalued relative to derivative instruments. Assets not
invested in U.S. Government Securities may be invested in other types of Fixed
Income Instruments. This Portfolio will normally have a minimum average
portfolio duration of eight years. For point of reference, the dollar-weighted
average portfolio maturity of the Portfolio is normally expected to be more than
ten years.

The Portfolio's investments in Fixed Income Instruments are limited to
those of U.S. dollar-denominated securities of U.S. issuers that are rated at
least A by Moody's or S&P, or, if unrated, determined by PIMCO to be of
comparable quality. In addition, the Portfolio may only invest up to 10% of its
assets in securities rated A by Moody's or S&P, and may only invest up to 25% of
its assets in securities rated Aa by Moody's or AA by S&P.

The Portfolio may invest all of its assets in derivative instruments, such
as options, futures contracts or swap agreements, or in mortgage-backed
securities. The Portfolio may lend its portfolio securities to brokers, dealers
and other financial institutions to earn income. Rather than investing directly
in the securities in which it primarily invests, the Portfolio may use other
investment techniques to gain exposure to market movements related to such
securities, such as entering into a series of contracts to buy or sell such
securities. The "total return" sought by the Portfolio consists of income earned
on the Portfolio's investments, plus capital appreciation, if any, which
generally arises from decreases in interest rates or improving credit
fundamentals for a particular sector or security.

- --------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely
affect its net asset value, yield and total return, are:

. Interest Rate Risk . Issuer Risk . Leveraging Risk
. Credit Risk . Derivatives Risk . Management Risk
. Market Risk . Mortgage Risk

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

- --------------------------------------------------------------------------------
Performance Information

Performance information for this Portfolio is not provided because it has not
been in operation for a full calendar year.

Prospectus 20
<PAGE>

PIMCO Long-Term U.S. Government Portfolio (continued)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.25% None 0.27% 0.52% (0.02%) 0.50%
- ---------------------------------------------------------------------------------------------------------------------------
Administrative 0.25% 0.15% 0.27% 0.67% (0.02%) 0.65%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.25% administrative fee paid by the class.
"Other Expenses" are based on estimates for the current fiscal year.

** PIMCO has agreed to reduce its administrative fee, subject to potential
future reimbursement, to the extent that total Portfolio operating expenses of
Institutional Class and Administrative Class shares would exceed, due to
organizational expenses and the payment by the Portfolio of its pro rata portion
of the Trust's Trustees' fees, 0.50% and 0.65%, respectively, of average daily
net assets.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3
- -------------------------------------------------------------
<S> <C> <C>
Institutional $ [________] $ [________]
- -------------------------------------------------------------
Administrative $66 $208
- -------------------------------------------------------------
</TABLE>

21 PIMCO Variable Insurance Trust
<PAGE>

PIMCO Global Bond Portfolio

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum total return, U.S. and foreign inter- B to Aaa; maximum
consistent with preservation mediate maturity fixed 10% below Baa
of capital and prudent income securities
investment management Dividend Frequency
Average Portfolio Duration Declared daily and
3-7 years distributed monthly

The Portfolio seeks to achieve its investment objective by investing under
normal circumstances at least 65% of its assets in Fixed Income Instruments of
issuers located in at least three countries (one of which may be the United
States), which may be represented by futures contracts (including related
options) with respect to such securities, and options on such securities. The
Portfolio invests primarily in securities of issuers located in economically
developed countries. Securities may be denominated in major foreign currencies,
baskets of foreign currencies (such as the euro), or the U.S. dollar.

PIMCO selects the Portfolio's foreign country and currency compositions
based on an evaluation of relative interest rates, exchange rates, monetary and
fiscal policies, trade and current account balances, and any other factors PIMCO
believes to be relevant. Investments in the securities of issuers located
outside the United States will normally vary between 25% and 75% of the
Portfolio's assets. The average portfolio duration of this Portfolio normally
varies within a three- to seven-year time frame. The Portfolio invests primarily
in investment grade debt securities, but may invest up to 10% of its assets in
high yield securities ("junk bonds") rated B or higher by Moody's or S&P, or, if
unrated, determined by PIMCO to be of comparable quality. The Portfolio is non-
diversified, which means that it may concentrate its assets in a smaller number
of issuers than a diversified Portfolio.

- --------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely
affect its net asset value, yield and total return, are:

. Interest Rate Risk . Foreign Investment Risk . Mortgage Risk
. Credit Risk . Currency Risk . Derivatives Risk
. Market Risk . Concentration Risk . Leveraging Risk
. Issuer Risk . Liquidity Risk . Management Risk

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

- --------------------------------------------------------------------------------
Performance Information

Performance information for this portfolio is not provided because this
Portfolio has not commenced operations as of the date if this Prospectus.

Prospectus 22
<PAGE>

PIMCO Global Bond Portfolio (continued)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.25% None 0.52% 0.77% (0.10%) 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
Administrative 0.25% 0.15% 0.52% 0.92% (0.02%) 0.90%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.50% administrative fee paid by the class.
"Other Expenses" are based on estimates for the current fiscal year.

** PIMCO has agreed to reduce its administrative fee, subject to potential
future reimbursement, to the extent that total Portfolio operating expenses of
the Institutional Class and Administrative Class shares would exceed, due to
organizational expenses and the payment by the Portfolio of its pro rata portion
of the Trust's Trustees' fees, 0.75% and 0.90%, respectively, of average daily
net assets.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3
- -------------------------------------------------------------
<S> <C> <C>
Institutional $ [________] $ [________]
- -------------------------------------------------------------
Administrative 92 287
- -------------------------------------------------------------
</TABLE>

23 PIMCO Variable Insurance Trust
<PAGE>

PIMCO Foreign Bond Portfolio

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum total Intermediate maturity B to Aaa; maximum
return, consistent with hedged foreign fixed 10% below Baa
preservation of capital income securities
and prudent investment Dividend Frequency
management Average Portfolio Duration Declared daily and
3-7 years distributed monthly

The Portfolio seeks to achieve its investment objective by investing under
normal circumstances at least 85% of its assets in Fixed Income Instruments of
issuers located outside the United States, representing at least three foreign
countries, which may be represented by futures contracts (including related
options) with respect to such securities, and options on such securities. Such
securities normally are denominated in major foreign currencies or baskets of
foreign currencies (such as the euro). The Portfolio will normally hedge at
least 75% of its exposure to foreign currency to reduce the risk of loss due to
fluctuations in currency exchange rates.

PIMCO selects the Portfolio's foreign country and currency compositions
based on an evaluation of relative interest rates, exchange rates, monetary and
fiscal policies, trade and current account balances, and any other factors PIMCO
believes to be relevant. The average portfolio duration of this Portfolio
normally varies within a three- to seven-year time frame. The Portfolio invests
primarily in investment grade debt securities, but may invest up to 10% of its
assets in high yield securities ("junk bonds") rated B or higher by Moody's or
S&P, or, if unrated, determined by PIMCO to be of comparable quality. The
Portfolio is non-diversified, which means that it may concentrate its assets in
a smaller number of issuers than a diversified Portfolio.

- --------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely
affect its net asset value, yield and total return, are:

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

- --------------------------------------------------------------------------------
Performance Information

Performance information for this Portfolio is not provided beause it has not
been in operation for a full calendar year.

Prospectus 24
<PAGE>

PIMCO Foreign Bond Portfolio (continued)

- --------------------------------------------------------------------------------
Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.25% None 0.52% 0.77% (0.02%) 0.75%
- --------------------------------------------------------------------------------------------------------------------------------
Administrative 0.25% 0.15% 0.52% 0.92% (0.02%) 0.90%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.50% administrative fee paid by the class.
"Other Expenses" are based on estimates for the current fiscal year.

** PIMCO has agreed to reduce its administrative fee, subject to potential
future reimbursement, to the extent that total Portfolio operating expenses of
the Institutional Class and Administrative Class shares would exceed, due to
organizational expenses and the payment by the Portfolio of its pro rata portion
of the Trust's Trustees' fees, 0.75% and 0.90%, respectively, of average daily
net assets.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3
- -------------------------------------------------------------------------------
<S> <C> <C>
Institutional $ [________] $ [________]
- -------------------------------------------------------------------------------
Administrative 92 287
- -------------------------------------------------------------------------------
</TABLE>

25 PIMCO Variable Insurance Trust
<PAGE>

PIMCO Emerging Markets Bond Portfolio

- -------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum total Emerging market fixed B to Aaa
return, consistent with income securities
preservation of capital Dividend Frequency
and prudent investment Average Portfolio Duration Declared daily and
management 0-8 years distributed monthly

The Portfolio seeks to achieve its investment objective by investing under
normal circumstances at least 80% of its assets in Fixed Income Instruments of
issuers that economically are tied to countries with emerging securities
markets. Such securities may be denominated in foreign currencies and the U.S.
dollar. The Portfolio may invest up to 10% of its assets in shares of investment
companies that invest primarily in emerging market debt securities. The average
portfolio duration of this Portfolio varies based on PIMCO's forecast for
interest rates and, under normal market conditions, is not expected to exceed
eight years.

PIMCO has broad discretion to identify and invest in countries that it
considers to qualify as emerging securities markets. However, PIMCO generally
considers an emerging securities market to be one located in any country that is
defined as an emerging or developing economy by the World Bank or its related
organizations, or the United Nations or its authorities. The Portfolio
emphasizes countries with relatively low gross national product per capita and
with the potential for rapid economic growth. PIMCO will select the Portfolio's
country and currency composition based on its evaluation of relative interest
rates, inflation rates, exchange rates, monetary and fiscal policies, trade and
current account balances, and any other specific factors PIMCO believes to be
relevant. The Portfolio likely will concentrate its investments in Asia, Africa,
the Middle East, Latin America and the developing countries of Europe. The
Portfolio may invest in securities whose return is based on the return of an
emerging securities market, rather than investing directly in securities of
issuers from emerging markets.

The Portfolio may invest substantially all of its assets in high yield
securities ("junk bonds") rated B or higher by Moody's or S&P, or, if unrated,
determined by PIMCO to be of comparable quality. The Portfolio is non-
diversified, which means that it may concentrate its assets in a smaller number
of issuers than a diversified Portfolio.

- --------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely
affect its net asset value, yield and total return, are:

. Interest Rate Risk . Emerging Markets Risk . Liquidity Risk
. Credit Risk . Foreign Investment Risk . Derivatives Risk
. High Yield Risk . Currency Risk . Leveraging Risk
. Market Risk . Concentration Risk . Management Risk
. Issuer Risk

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

Prospectus 26
<PAGE>

PIMCO Emerging Markets Bond Portfolio (continued)

- --------------------------------------------------------------------------------
Performance information

Performance information for this Portfolio is not provided because this
Portfolio has not commenced operations as of the date of this Prospectus.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.45% None 0.42% 0.87% (0.02%) 0.85%
- -----------------------------------------------------------------------------------------------------------------------------
Administrative 0.45% 0.15% 0.42% 1.02% (0.02%) 1.00%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.40% administrative fee paid by the class.
"Other Expenses" are based on estimates for the current fiscal year.

** PIMCO has agreed to reduce its administrative fee, subject to potential
future reimbursement, to the extent that total Portfolio operating expenses of
the Institutional Class and Administrative Class shares would exceed, due to
organizational expenses and the payment by the Portfolio of its pro rata portion
of the Trust's Trustees' fees, 0.85% and 1.00%, respectively, of average daily
net assets.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3
- ------------------------------------------------------------------------------
<S> <C> <C>
Institutional $ [________] $ [________]
- ------------------------------------------------------------------------------
Administrative 102 318
- ------------------------------------------------------------------------------
</TABLE>

27 PIMCO Variable Insurance Trust
<PAGE>

PIMCO Strategic Balanced Portfolio

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks maximum total return, Intermediate maturity B to Aaa; maximum
consistent with preservation fixed income securities 10% below Baa
of capital and prudent and S&P 500 stock index
investment management derivatives Dividend Frequency
Declared and dis-
Average Portfolio Duration tributed quarterly
0-6 years

The Portfolio seeks to achieve its investment objective by normally investing in
a combination of fixed income securities and equity securities or derivatives on
equity securities. The percentage of the Portfolio's assets invested in equities
and equity derivatives or in fixed income securities will be determined based on
methodology, developed by PIMCO, that forecasts stages in the business cycle and
considers the risk and reward potential of equity and fixed income securities
within specific phases of the business cycle. The Portfolio's equity exposure
will vary between 45% and 75% of assets, and its fixed income exposure will
range from a minimum of 25% to a maximum of 55%.

The Portfolio's equity exposure normally consists of S&P 500 derivatives,
backed by a portfolio of short-term Fixed Income Instruments. PIMCO uses S&P 500
derivatives in addition to or in place of S&P 500 stocks to attempt to equal or
exceed the performance of the S&P 500. The value of S&P 500 derivatives closely
track changes in the value of the index. However, S&P 500 derivatives may be
purchased with a fraction of the assets that would be needed to purchase the
equity securities directly, so that the remainder of the assets may be invested
in Fixed Income Instruments. PIMCO will actively manage the fixed income assets
serving as cover for derivatives, as well as any other fixed income assets held
by the Portfolio, with a view toward enhancing the Portfolio's total return
investment performance. Though the Portfolio does not normally invest directly
in S&P 500 securities, when S&P 500 derivatives appear to be overvalued relative
to the S&P 500, the Portfolio may invest the equity portion of its assets in a
"basket" of S&P 500 stocks.

The Portfolio's fixed income exposure will normally consist of a
diversified portfolio of Fixed Income Instruments of varying maturities. The
securities may be of any maturity. The average portfolio duration of the fixed
income portion of this Portfolio's assets will normally vary within a three- to
six-year time frame. The Fixed Income Instruments in which the Portfolio invests
are primarily investment grade, but the Portfolio may invest up to 10% of its
assets in high yield securities ("junk bonds") rated B or higher by Moody's or
S&P, or, if unrated, determined by PIMCO to be of comparable quality. The
Portfolio may invest up to 20% of its assets in securities denominated in
foreign currencies, and may invest beyond this limit in U.S. dollar denominated
securities of foreign issuers. The Portfolio will normally hedge at least 75% of
its exposure to foreign currency to reduce the risk of loss due to fluctuations
in currency exchange rates.

The Portfolio may invest all of its assets in derivative instruments, such
as options, futures contracts or swap agreements. The Portfolio may lend its
portfolio securities to brokers, dealers and other financial institutions to
earn income. Rather than investing directly in the securities in which it
primarily invests, the Portfolio may use other investment techniques to gain
exposure to market movements related to such securities, such as entering into a
series of contracts to buy or sell such securities. The "total return" sought by
the Portfolio consists of net income earned on the Portfolio's investments, plus
capital appreciation arising from increases in the market value of the
Portfolio's holdings.

- --------------------------------------------------------------------------------
Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely
affect its net asset value, yield and total return, are:

. Market Risk . Derivatives Risk . Mortgage Risk
. Issuer Risk . Liquidity Risk . Leveraging Risk
. Interest Rate Risk . Foreign Investment Risk . Management Risk
. Credit Risk . Currency Risk

Prospectus 28
<PAGE>

PIMCO Strategic Balanced Portfolio (continued)

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

Performance Information

Performance information for this Portfolio is not provided because this
Portfolio has not commenced operations as of the date of this Prospectus.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.40% None 0.22% 0.62% (0.02%) 0.60%
- ---------------------------------------------------------------------------------------------------------------------------
Administrative 0.40% 0.15% 0.22% 0.77% (0.02%) 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.20% administrative fee paid by the class.
"Other Expenses" are based on estimates for the current fiscal year.

** PIMCO has agreed to reduce its administrative fee, subject to potential
future reimbursement, to the extent that total Portfolio operating expenses of
the Institutional Class and Administrative Class shares would exceed, due to
organizational expenses and the payment by the Portfolio of its pro rata portion
of the Trust's Trustees' fees, 0.60% and 0.75%, respectively, of average daily
net assets.

<TABLE>
<CAPTION>
Share Class Year 1 Year 3
- -------------------------------------------------------------
<S> <C> <C>
Institutional $ [________] $ [________]
- -------------------------------------------------------------
Administrative 77 240
- -------------------------------------------------------------
</TABLE>

29 PIMCO Variable Insurance Trust
<PAGE>

PIMCO StocksPLUS Growth and Income Portfolio

- --------------------------------------------------------------------------------
Principal Investments and Strategies

Investment Objective Portfolio Focus Credit Quality
Seeks total return which S&P 500 stock index B to Aaa; maximum
exceeds that of the S&P 500 derivatives backed by a 10% below Baa
portfolio of short-term
fixed income securities Dividend Frequency
Declared and dis-
Average Portfolio Duration tributed quarterly
0-1 year

The Portfolio seeks to exceed the total return of the S&P 500 by investing under
normal circumstances substantially all of its assets in S&P 500 derivatives,
backed by a portfolio of Fixed Income Instruments. The Portfolio may invest in
common stocks, options, futures, options on futures and swaps. The Portfolio
uses S&P 500 derivatives in addition to or in place of S&P 500 stocks to attempt
to equal or exceed the performance of the S&P 500. The value of S&P 500
derivatives closely track changes in the value of the index. However, S&P 500
derivatives may be purchased with a fraction of the assets that would be needed
to purchase the equity securities directly, so that the remainder of the assets
may be invested in Fixed Income Instruments. PIMCO actively manages the fixed
income assets held by the Portfolio with a view toward enhancing the Portfolio's
total return, subject to an overall portfolio duration which is normally not
expected to exceed one year.

The S&P 500 is composed of 500 selected common stocks that represent
approximately two-thirds of the total market value of all U.S. common stocks.
The Portfolio is neither sponsored by nor affiliated with S&P. The Portfolio
seeks to remain invested in S&P 500 derivatives or S&P 500 stocks even when the
S&P 500 is declining.

Though the Portfolio does not normally invest directly in S&P 500
securities, when S&P 500 derivatives appear to be overvalued relative to the S&P
500, the Portfolio may invest all of its assets in a "basket" of S&P 500 stocks.
Individual stocks are selected based on an analysis of the historical
correlation between the return of every S&P 500 stock and the return on the S&P
500 itself. PIMCO may employ fundamental analysis of factors such as earnings
and earnings growth, price to earnings ratio, dividend growth, and cash flows to
choose among stocks that satisfy the correlation tests. Stocks chosen for the
Portfolio are not limited to those with any particular weighting in the S&P 500.

Assets not invested in equity securities or derivatives may be invested in
Fixed Income Instruments. The Portfolio may invest up to 10% of its assets in
high yield securities ("junk bonds") rated B or higher by Moody's or S&P, or, if
unrated, determined by PIMCO to be of comparable quality. The Portfolio may
invest up to 20% of its assets in securities denominated in foreign currencies
and may invest beyond this limit in U.S. dollar denominated securities of
foreign issuers. The Portfolio will normally hedge at least 75% of its exposure
to foreign currency to reduce the risk of loss due to fluctuations in currency
exchange rates. In addition, the Portfolio may lend its portfolio securities to
brokers, dealers and other financial institutions to earn income.

Principal Risks

Under certain conditions, generally in a market where the value of both S&P 500
derivatives and fixed income securities are declining, the Portfolio may
experience greater losses than would be the case if it invested directly in a
portfolio of S&P 500 stocks. Among the principal risks of investing in the
Portfolio, which could adversely affect its net asset value, yield and total
return, are:

. Market Risk . Interest Rate Risk . Mortgage Risk
. Issuer Risk . Liquidity Risk . Leveraging Risk
. Derivatives Risk . Foreign Investment Risk . Management Risk
. Credit Risk . Currency Risk

Prospectus 30
<PAGE>

Please see "Summary of Principal Risks" following the Portfolio Summaries for a
description of these and other risks of investing in the Portfolio.

PIMCO StocksPLUS Growth and Income Portfolio (continued)

Performance Information

Calendar Year Total Returns -- Administrative Class

LOGO

<TABLE>
<CAPTION>
Highest and Lowest Quarter Returns
(for periods shown in the bar chart)
------------------------------------
<S> <C>
Highest (4th Qtr. `98) 21.95%
------------------------------------
Lowest (3rd Qtr. `98) -8.82%
</TABLE>

Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/99)

<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
- ---------------------------------------------------------
<S> <C> <C> <C>
Administrative Class 30.11% N/A N/A
- ---------------------------------------------------------
S&P 500 Index(1) 28.58% N/A N/A
- ---------------------------------------------------------
</TABLE>

(1) The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of common stocks. It is not possible to invest directly in the index.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Portfolio:

Shareholder Fees (fees paid directly from your investment) None

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)

<TABLE>
<CAPTION>
Total Annual
Portfolio Expense Net Portfolio
Share Class Advisory Fees Service Fees Other* Operating Expenses Reduction** Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.40% None 0.17% 0.57% (0.07%) 0.50%
- ---------------------------------------------------------------------------------------------------------------------------
Administrative 0.40% 0.15% 0.17% 0.72% (0.07%) 0.65%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* "Other Expenses" reflects a 0.10% administrative fee paid by the class.

31 PIMCO Variable Insurance Trust
<PAGE>

<TABLE>
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $ $ $
- ---------------------------------------------------------------
Administrative 66 208 362 810
- ---------------------------------------------------------------
</TABLE>

Prospectus 32
<PAGE>

Summary of Principal Risks

The value of your investment in a Portfolio changes with the values of that
Portfolio's investments. Many factors can affect those values. The factors that
are most likely to have a material effect on a particular Portfolio's portfolio
as a whole are called "principal risks." The principal risks of each Portfolio
are identified in the Portfolio Summaries and are described in this section.
Each Portfolio may be subject to additional principal risks and risks other than
those described below because the types of investments made by a Portfolio can
change over time. Securities and investment techniques mentioned in this summary
and described in greater detail under "Characteristics and Risks of Securities
and Investment Techniques" appear in bold type. That section and "Investment
Objectives and Policies" in the Statement of Additional Information also include
more information about the Portfolio, their investments and the related risks.
There is no guarantee that a Portfolio will be able to achieve its investment
objective.

Interest Rate Risk

As interest rates rise, the value of fixed income securities held by a Portfolio
are likely to decrease. Securities with longer durations tend to be more
sensitive to changes in interest rates, usually making them more volatile than
securities with shorter durations.

Credit Risk

A Portfolio could lose money if the issuer or guarantor of a fixed income
security, or the counterparty to a derivatives contract, repurchase agreement or
a loan of portfolio securities, is unable or unwilling to make timely principal
and/or interest payments, or to otherwise honor its obligations. Securities are
subject to varying degrees of credit risk, which are often reflected in credit
ratings. Municipal bonds are subject to the risk that litigation, legislation or
other political events, local business or economic conditions, or the bankruptcy
of the issuer could have a significant effect on an issuer's ability to make
payments of principal and/or interest.

High Yield
Risk

Portfolio that invest in high yield securities and unrated securities of similar
credit quality (commonly known as "junk bonds") may be subject to greater levels
of interest rate, credit and liquidity risk than Portfolio that do not invest in
such securities. High yield securities are considered predominately speculative
with respect to the issuer's continuing ability to make principal and interest
payments. An economic downturn or period of rising interest rates could
adversely affect the market for high yield securities and reduce a Portfolio's
ability to sell its high yield securities (liquidity risk).

Market Risk

The market price of securities owned by a Portfolio may go up or down, sometimes
rapidly or unpredictably. Securities may decline in value due to factors
affecting securities markets generally or particular industries represented in
the securities markets. The value of a security may decline due to general
market conditions which are not specifically related to a particular company,
such as real or perceived adverse economic conditions, changes in the general
outlook for corporate earnings, changes in interest or currency rates or adverse
investor sentiment generally. They may also decline due to factors which affect
a particular industry or industries, such as labor shortages or increased
production costs and competitive conditions within an industry. Equity
securities generally have greater price volatility than fixed income securities.

Issuer Risk

The value of a security may decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer's goods or services.

Liquidity Risk

Liquidity risk exists when particular investments are difficult to purchase or
sell. A Portfolio's investments in illiquid securities may reduce the returns of
the Portfolio because it may be unable to sell the illiquid securities at an
advantageous time or price. Portfolios with principal investment strategies that
involve foreign securities, derivatives or securities with substantial market
and/or credit risk tend to have the greatest exposure to liquidity risk.

Derivatives Risk

Each Portfolio (except the Money Market Portfolio) may use derivatives, which
are financial contracts whose value depends on, or is derived from, the value of
an underlying asset, reference rate or index. The various derivative instruments
that the Portfolio may use are referenced under "Characteristics and

33 PIMCO Variable Insurance Trust
<PAGE>

Risks of Securities and Investment Techniques--Derivatives" in this Prospectus
and described in more detail under "Investment Objectives and Policies" in the
Statement of Additional Information. The Portfolio typically use derivatives as
a substitute for taking a position in the underlying asset and/or part of a
strategy designed to reduce exposure to other risks, such as interest rate or
currency risk. The Portfolio may also use derivatives for leverage, in which
case their use would involve leveraging risk. A Portfolio's use of derivative
instruments involves risks different from, or possibly greater than, the risks
associated with investing directly in securities and other traditional
investments. Derivatives are subject to a number of risks described elsewhere in
this section, such as liquidity risk, interest rate risk, market risk, credit
risk and management risk. They also involve the risk of mispricing or improper
valuation and the risk that changes in the value of the derivative may not
correlate perfectly with the underlying asset, rate or index. A Portfolio
investing in a derivative instrument could lose more than the principal amount
invested. Also, suitable derivative transactions may not be available in all
circumstances and there can be no assurance that a Portfolio will engage in
these transactions to reduce exposure to other risks when that would be
beneficial.

Mortgage Risk

A Portfolio that purchases mortgage-related securities is subject to certain
additional risks. Rising interest rates tend to extend the duration of mortgage-
related securities, making them more sensitive to changes in interest rates. As
a result, in a period of rising interest rates, a Portfolio that holds mortgage-
related securities may exhibit additional volatility. This is known as extension
risk. In addition, mortgage-related securities are subject to prepayment risk.
When interest rates decline, borrowers may pay off their mortgages sooner than
expected. This can reduce the returns of a Portfolio because the Portfolio will
have to reinvest that money at the lower prevailing interest rates.

Foreign (Non-U.S. Investment Risk)

A Portfolio that invests in foreign securities may experience more rapid and
extreme changes in value than a Portfolio that invests exclusively in securities
of U.S. companies. The securities markets of many foreign countries are
relatively small, with a limited number of companies representing a small number
of industries. Additionally, issuers of foreign securities are usually not
subject to the same degree of regulation as U.S. issuers. Reporting, accounting
and auditing standards of foreign countries differ, in some cases significantly,
from U.S. standards. Also, nationalization, expropriation or confiscatory
taxation, currency blockage, political changes or diplomatic developments could
adversely affect a Portfolio's investments in a foreign country. In the event of
nationalization, expropriation or other confiscation, a Portfolio could lose its
entire investment in foreign securities. Adverse conditions in a certain region
can adversely affect securities of other countries whose economies appear to be
unrelated. To the extent that a Portfolio invests a significant portion of its
assets in a concentrated geographic area like Eastern Europe or Asia, the
Portfolio will generally have more exposure to regional economic risks
associated with foreign investments.

Emerging Markets Risk

Foreign investment risk may be particularly high to the extent that a Portfolio
invests in emerging market securities of issuers based in countries with
developing economies. These securities may present market, credit, currency,
liquidity, legal, political and other risks different from, or greater than, the
risks of investing in developed foreign countries.

Currency Risk

Portfolio that invest directly in foreign currencies or in securities that trade
in, and receive revenues in, foreign currencies (non-U.S.) are subject to the
risk that those currencies will decline in value relative to the U.S. dollar,
or, in the case of hedging positions, that the U.S. dollar will decline in value
relative to the currency being hedged. Currency rates in foreign countries may
fluctuate significantly over short periods of time for a number of reasons,
including changes in interest rates, intervention (or the failure to intervene)
by U.S. or foreign governments, central banks or supranational entities such as
the International Monetary Portfolio, or by the imposition of currency controls
or other political developments in the U.S. or abroad. As a result, the
Portfolio's investments in foreign currency-denominated securities may reduce
the returns of the Portfolio.

Concentration Risk

Concentration of investments in a small number of issuers, industries or foreign
currencies increases risk. The Real Return Bond, Global Bond, Foreign Bond, and
Emerging Markets Bond Portfolios are "non-diversified," which means that they
may invest a greater percentage of their assets in the securities of a single
issuer (such as bonds issued by a particular state) than the other Portfolios.

Prospectus 34
<PAGE>

Portfolios that invest in a relatively small number of issuers are more
susceptible to risks associated with a single economic, political or regulatory
occurrence than a more diversified portfolio might be. Some of those issuers
also may present substantial credit or other risks. Similarly, a Portfolio may
be more sensitive to adverse economic, business or political developments if it
invests a substantial portion of its assets in the bonds of similar projects or
from issuers in the same state.

Leveraging Risk

Certain Portfolios may engage in transactions that may give rise to a form of
leverage. Such transactions may include, among others, reverse repurchase
agreements, loans of portfolios securities, and the use of when-issued, delayed
delivery or forward commitment transactions. The use of derivatives may also
create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid
assets or otherwise cover the transactions that may give rise to such risk. The
use of leverage may cause a Portfolio to liquidate portfolio positions when it
may not be advantageous to do so to satisfy its obligations or to meet
segregation requirements. Leverage, including borrowing, may cause a Portfolio
to be more volatile than if the Portfolio had not been leveraged. This is
because leverage tends to exaggerate the effect of any increase or decrease in
the value of a Portfolio's portfolio securities.

Management Risk

Each Portfolio is subject to management risk because it is an actively managed
investment portfolio. PIMCO and each individual portfolio manager will apply
investment techniques and risk analyses in making investment decisions for the
Portfolio, but there can be no guarantee that these will produce the desired
results.

35 PIMCO Variable Insurance Trust
<PAGE>

Management of the Portfolios

Investment Adviser and Administrator

PIMCO serves as investment adviser and the administrator (serving in its
capacity as administrator, the "Administrator") for the Portfolios. Subject to
the supervision of the Board of Trustees, PIMCO is responsible for managing the
investment activities of the Portfolios and the Portfolios' business affairs and
other administrative matters.

PIMCO's address is 840 Newport Center Drive, Suite 300, Newport Beach,
California 92660. Organized in 1971, PIMCO provides investment management and
advisory services to private accounts of institutional and individual clients to
mutual funds. As of December 31, 1999, PIMCO had approximately $186 billion in
assets under management.

Advisory Fees

Each Portfolio pays PIMCO fees in return for providing investment advisory
services. For the fiscal year ended December 31, 1999, the Portfolios paid
monthly advisory fees to PIMCO at the following annual rates (stated as a
percentage of the average daily net assets of each Portfolio taken separately):

Portfolio Advisory Fees
- -------------------------------------------------------------------------------
Money Market Portfolio................................................ 0.15%
Strategic Balanced and StocksPLUS Growth and Income Portfolios........ 0.40%
Emerging Markets Bond Portfolio....................................... 0.45%
All other Portfolios.................................................. 0.25%

Administrative Fees

Each Portfolio pays for the administrative services it requires under a fee
structure which is essentially fixed. Institutional and Administrative Class
shareholders of each Portfolio pay an administrative fee to PIMCO, computed as a
percentage of the Portfolio's assets attributable in the aggregate to that class
of shares. PIMCO, in turn, provides or procures administrative services for
Institutional and Administrative Class shareholders and also bears the costs of
various third-party services required by the Portfolios, including audit,
custodial, portfolio accounting, legal, transfer agency and printing costs. The
result of this fee structure is an expense level for Institutional and
Administrative Class shareholders of each Portfolio that, with limited
exceptions, is precise and predictable under ordinary circumstances.

Portfolio Administrative Fees
- -------------------------------------------------------------------------------------
<S> <C>
StocksPLUS Growth & Income Portfolio..................................... 0.10%
Money Market, Short-Term Bond, and Strategic Balanced Portfolios......... 0.20%
High Yield Portfolio..................................................... 0.35%
Emerging Markets Bond Portfolio.......................................... 0.40%
Global Bond and Foreign Bond Portfolios.................................. 0.50%
All other Portfolios..................................................... 0.25%
</TABLE>

The table below provides information about the individual portfolio managers
responsible for management of the Trust's Portfolios, including their
occupations for the past five years.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Portfolio Portfolio Manager Since Recent Professional Experience
Money Market Paul A. McCulley 9/99 Executive Vice President, PIMCO. He has managed fixed
Short-Term 9/99 income assets since joining PIMCO in April, 1999. Prior to
joining PIMCO, Mr. McCulley was associated with Warburg
Dillon Read as a Managing Director and Head of Economic
and Strategy Research for the Americas, where he managed
macro research world-wide.
</TABLE>
Prospectus 36
<PAGE>

<TABLE>

<S> <C> <C> <C>
Low Duration William H. Gross 2/99* Managing Director, Chief Investment Officer and a founding
partner of PIMCO.
Total Return 12/97*
Total Return II 5/99*
Strategic Balanced -----
StocksPLUS Growth
and Income 12/97

Real Return Bond John B. Brynjolfsson 9/99* Senior Vice President, PIMCO. He joined PIMCO as a Portfolio
Manager in 1989, and has managed fixed income accounts for
various institutional clients and funds since that time.

High Yield Benjamin L. Trosky 4/98* Managing Director, PIMCO. He joined PIMCO as a Portfolio
Manager in 1990,

Long-Term U.S. Pasi Hamalainen 4/99* Executive Vice President, PIMCO. He joined PIMCO as a
Government Portfolio Manager in 1994, and has managed fixed income
accounts for various institutional clients and funds since
that time.

Foreign Bond Lee R. Thomas, III 2/99* Managing Director and Senior International Portfolio
Global Bond ---- Manager, PIMCO. He joined PIMCO as a Portfolio Manager in
1995, and has managed fixed income accounts for various
institutional clients and funds since that time. Prior to
joining PIMCO, he was associated with Investcorp as a
member of the management committee responsible for global
securities and foreign exchange trading.

Emerging Markets Mohamed El-Erian ---- Executive Vice President, PIMCO. He joined PIMCO as a
Bond Portfolio Manager in 1999. Prior to joining PIMCO, he was
a Managing Director for Salomon Smith Barney/Citibank,
where he was head of emerging markets research. Prior to
that he was associated with the International Monetary
Fund as a Deputy Director and Advisor.
</TABLE>
- ----------------
* Since inception of the Portfolio.

Distributor

The Trust's Distributor is PIMCO Funds Distributors LLC, a wholly owned
subsidiary of PIMCO Advisors L.P. The Distributor, located at 2187 Atlantic
Street, Stamford CT 06902, is a broker-dealer registered with the Securities and
Exchange Commission.

Portfolio Transactions

PIMCO has discretion to select the brokers and dealers with which it places
orders for the purchase and sale of portfolio investments. In doing so, the
PIMCO will seek the best price and execution of the Portfolios' orders. A
Portfolio may pay higher commission rates than the lowest available when PIMCO
believes it is reasonable in light of the value of the brokerage and research
services provided by the broker effecting the transaction.

PIMCO manages the Portfolios without regard generally to restrictions on
portfolio turnover. The use of derivative instruments with relatively short
maturities may tend to exaggerate the portfolio turnover rate for some of the
Portfolios. Trading in fixed income securities does not generally involve the
payment of brokerage commissions, but does involve indirect transaction costs.
The use of futures contracts may involve the payment of commissions to futures
commission merchants. A Portfolio with a higher rate of portfolio turnover will
generally incur higher transaction costs.

37 PIMCO Variable Insurance Trust
<PAGE>

Some securities considered for investment by the Portfolios also may be
appropriate for other clients served by PIMCO. If a purchase or sale of
securities consistent with the investment policies of a Portfolio and one or
more of these clients served by PIMCO is considered at or about the same time,
transactions in such securities will be allocated among the Portfolio and
clients in a manner deemed fair and reasonable by PIMCO. PIMCO may aggregate
orders for the Portfolios with simultaneous transactions entered into on behalf
of other clients of PIMCO.

Investment Options--
Institutional Class and Administrative Class Shares

The Trust offers investors Institutional Class and Administrative Class shares
of the Portfolios in this Prospectus. The Trust does not charge any sales
charges (loads) or other fees in connection with purchases, sales (redemptions)
or exchanges of Institutional Class or Administrative Class shares.
Administrative Class shares are subject to a higher level of operating expenses
than Institutional Class shares due to an additional service fee paid by
Administrative Class shares as described below. Therefore, Institutional Class
shares will generally pay higher dividends and have a more favorable investment
return than Administrative Class shares.

Service Fees--Administrative Class Shares.

The Trust has adopted an Administrative Services Plan (the "Plan") for the
Administrative Class shares of each Portfolio. The Plan allows the Portfolios to
use its Administrative Class assets to reimburse financial intermediaries that
provide services relating to Administrative Class shares. The services that will
be provided under the Plan include, among other things, teleservicing support in
connection with Portfolios; delivery of current Trust prospectuses and other
shareholder communications; recordkeeping services; provision of support
services, including providing information about the Trust and its Portfolios and
answering questions concerning the Trust and its Portfolios, including questions
respecting investors' interests in one or more Portfolios; provision and
administration of insurance features for the benefit of investors in connection
with the Portfolios; receiving, aggregating and forwarding purchase and
redemption orders; processing dividend payments; issuing investor reports and
transaction confirmations; providing subaccounting services; general account
administration activities; and providing such similar services as the Trust may
reasonably request to the extent the service provider is permitted to do so
under applicable statutes, rules or regulation. The Plan also permits
reimbursement for services in connection with the administration of plans or
programs that use Administrative Class shares of the Portfolios as their funding
medium and for related expenses.

The Plan permits a Portfolio to make total reimbursements at an annual rate of
0.15% of the Portfolio's average daily net assets attributable to its
Administrative Class shares. Because these fees are paid out of a Portfolio's
Administrative Class assets on an ongoing basis, over time they will increase
the cost of an investment in Administrative Class shares and may cost an
investor more than other types of sales charges.

Arrangements with Service Agents. Institutional Class and Administrative Class
shares of the Portfolios may be offered through certain brokers and financial
intermediaries ("service agents") that have established a shareholder servicing
relationship with the Trust on behalf of their customers. The Trust pays no
compensation to such entities other than service and/or distribution fees paid
with respect to Administrative Class shares. Service agents may impose
additional or different conditions than the Trust on purchases, redemptions or
exchanges of Portfolio shares by their customers. Service agents may also
independently establish and charge their customers transaction fees, account
fees and other amounts in connection with purchases, sales and redemptions of
Portfolio shares in addition to any fees charged by the Trust. These additional
fees may vary over time and would increase the cost of the customer's investment
and lower investment returns. Each service agent is responsible for transmitting
to its customers a schedule of any such fees and information regarding any
additional or different

Prospectus 38
<PAGE>

conditions regarding purchases, redemptions and exchanges. Shareholders who are
customers of service agents should consult their service agents for information
regarding these fees and conditions.

Purchases and Redemptions

Purchasing Shares

As of the date of this Prospectus, shares of the Portfolios are offered for
purchase by Separate Accounts to serve as an investment medium for Variable
Contracts issued by life insurance companies, and to qualified pension and
retirement plans outside of the separate account context.

While the Portfolios currently do not foresee any disadvantages to Variable
Contract Owners if the Portfolios serve as an investment medium for both
variable annuity contracts and variable life insurance policies, due to
differences in tax treatment or other considerations, it is theoretically
possible that the interest of owners of annuity contracts and insurance policies
for which the Portfolios served as an investment medium might at some time be in
conflict. However, the Trust's Board of Trustees and each insurance company with
a separate account allocating assets to the Portfolios are required to monitor
events to identify any material conflicts between variable annuity contract
owners and variable life insurance policy owners, and would have to determine
what action, if any, should be taken in the event of such a conflict. If such a
conflict occurred, an insurance company participating in the Portfolios might be
required to redeem the investment of one or more of its separate accounts from
the Portfolios, which might force the Portfolios to sell securities at
disadvantageous prices.

The Trust is "open for business" on each day the New York Stock Exchange (the
"Exchange") is open for trading. A purchase order, together with payment in
proper form, received before the close of regular trading on the Exchange
(normally 4:00 p.m., Eastern time) on a day the Trust is open for business will
be effected at that day's net asset value. In order to facilitate efficient
operation of the StocksPLUS Growth and Income and Strategic Balanced Portfolios,
the Trust requests that all purchase orders for these Portfolios be received at
least one hour prior to the close of regular trading on the Exchange (normally
3:00 p.m., Eastern time). An order received after the close of regular trading
on the Exchange generally will be effected at the net asset value determined on
the next business day.

The Trust and its distributor each reserves the right, in its sole discretion,
to suspend the offering of shares of the Portfolios or to reject any purchase
order, in whole or in part, or to redeem shares, in whole or in part, when, in
the judgment of management, such suspension or rejection is in the best
interests of the Trust. The sale of shares will be suspended during any period
in which the Exchange is closed for other than weekends or holidays, or if
permitted by the rules of the SEC, when trading on the Exchange is restricted or
during an emergency which makes it impracticable for the Portfolios to dispose
of their securities or to determine fairly the value of their net assets, or
during any other period as permitted by the SEC for the protection of investors.
In the event that a Portfolio ceases offering its shares, any investments
allocated to the Portfolio will, subject to any necessary regulatory approvals,
be invested in another Portfolio.

Redeeming Shares

Shares may be redeemed without charge on any day that the net asset value is
calculated. All redemption orders are effected at the net asset value per share
next determined after a redemption request is received. Payment for shares
redeemed normally will be made within seven days.

The Trust may suspend the right of redemption or postpone the payment date at
times when the Exchange is closed, or during certain other periods as permitted
under the federal securities laws. In consideration of the best interests of the
remaining shareholders, the Trust reserves the right to pay redemption proceeds
in whole or in part by a distribution in kind of securities held by a Portfolio
in lieu of cash. It is highly unlikely that shares would ever be redeemed in
kind. If shares are redeemed in kind, however, the redeeming shareholder should
expect to incur transaction costs upon the disposition of the securities
received in the distribution.

39 PIMCO Variable Insurance Trust
<PAGE>

How Portfolio Shares Are Priced

The net asset value ("NAV") of a Portfolio's Institutional and
Administrative Class shares is determined by dividing the total value of a
Portfolio's investments and other assets attributable to that class, less any
liabilities, by the total number of shares outstanding of that class.

Except for the Money Market Portfolio, for purposes of calculating NAV,
portfolio securities and other assets for which market quotes are available are
stated at market value. Market value is generally determined on the basis of
last reported sales prices, or if no sales are reported, based on quotes
obtained from a quotation reporting system, established market makers, or
pricing services. Certain securities or investments for which daily market
quotations are not readily available may be valued, pursuant to guidelines
established by the Board of Trustees, with reference to other securities or
indices. Short-term investments having a maturity of 60 days or less are
generally valued at amortized cost. Exchange traded options, futures and options
on futures are valued at the settlement price determined by the exchange. Other
securities for which market quotes are not readily available are valued at fair
value as determined in good faith by the Board of Trustees or persons acting at
their direction.

The Money Market Portfolio's securities are valued using the amortized
cost method of valuation, which involves valuing a security at cost on the date
of acquisition and thereafter assuming a constant accretion of a discount or
amortization of a premium to maturity, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Portfolio
would receive if it sold the instrument.

Investments initially valued in currencies other than the U.S. dollar are
converted to U.S. dollars using exchange rates obtained from pricing services.
As a result, the NAV of a Portfolio's shares may be affected by changes in the
value of currencies in relation to the U.S. dollar. The value of securities
traded in markets outside the United States or denominated in currencies other
than the U.S. dollar may be affected significantly on a day that the New York
Stock Exchange is closed and an investor is not able to purchase, redeem or
exchange shares.

Portfolio shares are valued at the close of regular trading (normally 4:00
p.m., Eastern time) (the "NYSE Close") on each day that the New York Stock
Exchange is open. For purposes of calculating the NAV, the Funds normally use
pricing data for domestic equity securities received shortly after the NYSE
Close and do not normally take into account trading, clearances or settlements
that take place after the NYSE Close. Domestic fixed income and foreign
securities are normally priced using data reflecting the earlier closing of the
principal markets for those securities. Information that becomes known to the
Funds or its agents after the NAV has been calculated on a particular day will
not generally be used to retroactively adjust the price of a security or the NAV
determined earlier that day.

In unusual circumstances, instead of valuing securities in the usual
manner, the Funds may value securities at fair value or estimate their value as
determined in good faith by the Board of Trustees, generally based upon
recommendations provided by PIMCO. Fair valuation may also be used if
extraordinary events occur after the close of the relevant market but prior to
the NYSE Close.

Under certain circumstances, the per share NAV of the Administrative Class
shares of the Funds may be lower than the per share NAV of the Institutional
Class shares as a result of the daily expense accruals of the service fees paid
by Administrative Class shares. Generally, for Funds that pay income dividends,
those dividends are expected to differ over time by approximately the amount of
the expense accrual differential between the two classes.

Tax Consequences

Prospectus 40
<PAGE>

Each Portfolio intends to qualify as a regulated investment company annually and
to elect to be treated as a regulated investment company for federal income tax
purposes. As such, a Portfolio generally will not pay federal income tax on the
income and gains it pays as dividends to its shareholders. In order to avoid a
4% federal excise tax, each Portfolio intends to distribute each year
substantially all of its net income and gains.

The Portfolios also intend to comply with diversification requirements imposed
by regulations under Section 817(h) of the Internal Revenue Code, as amended.
Compliance with these diversification rules generally will limit the ability of
a Portfolio to invest greater than 55% of its total assets in direct obligations
of the U.S. Treasury (or any other issuer), or to invest primarily in securities
issued by a single agency or instrumentality of the U.S. Government.

If a Portfolio fails to meet the diversification requirement under Section
817(h), income with respect to Variable Contracts invested in the Portfolio at
any time during the calendar quarter in which the failure occurred could become
currently taxable to the owners of the Variable Contracts and income for prior
periods with respect to such contracts also could be taxable, most likely in the
year of the failure to achieve the required diversification. Other adverse tax
consequences could also ensue.

Please refer to the prospectus for the Separate Account and Variable Contract
for information regarding the federal income tax treatment of distributions to
the Separate Account. See "Additional Information--Additional Tax Information"
in the Portfolios' Statement of Additional Information for more information on
taxes.

Characteristics and Risks of
Securities and Investment Techniques

A Portfolio's risk profile is largely defined by the Portfolio's principal
securities and the investment practices that it uses. You can find a concise
description of each Portfolio's risk profile in the section captioned
"Description of Portfolios" in this Prospectus. As with any mutual fund, there
is no guarantee that a Portfolio will earn income or show a positive total
return over any period of time, and you could lose money by investing in the
Portfolio.

The Portfolios are permitted to use, within limits established by the
Trustees and imposed by applicable laws, a wide variety of securities and
investment practices, each of which has certain risks and opportunities
associated with it. To the extent that a Portfolio uses these securities or
practices, its overall performance may be affected, either positively or
negatively. The following pages describe certain of the securities in which the
Portfolios may invest and certain of investment practices in which the
Portfolios may engage, along with the risks associated with them. Additional
information about these and other investments and investment practices may be
found in the Statement of Additional Information, which you may obtain free of
charge by calling (888) 746-2688.

Securities Selection

Most of the Portfolios in this prospectus seek maximum total return. The
total return sought by a Portfolio consists of both income earned on a
Portfolio's investments and capital appreciation, if any, arising from increases
in the market value of a Portfolio's holdings. Capital appreciation of fixed
income securities generally results from decreases in market interest rates or
improving credit fundamentals for a particular market sector or security.

In selecting securities for a Portfolio, PIMCO develops an outlook for
interest rates, foreign currency exchange rates and the economy; analyzes credit
and call risks, and uses other security selection techniques. The proportion of
a Portfolio's assets committed to investment in securities with particular
characteristics (such as quality, sector, interest rate or maturity) varies
based on PIMCO's outlook for the U.S. and foreign economies, the financial
markets and other factors.

PIMCO attempts to identify areas of the bond market that are undervalued
relative to the rest of the market. PIMCO identifies these areas by grouping
bonds into the following sectors: money markets, governments, corporates,
mortgages, asset-backed and international. Sophisticated proprietary software
then assists in evaluating sectors and pricing specific securities. Once
investment opportunities are identified, PIMCO will shift assets among sectors
depending upon changes in

41 PIMCO Variable Insurance Trust
<PAGE>

relative valuations and credit spreads. There is no guarantee that PIMCO's
security selection techniques will produce the desired results.

U.S. Government Securities

U.S. Government securities are obligations of and, in certain cases,
guaranteed by, the U.S. Government, its agencies or instrumentalities. U.S.
Government Securities are subject to market and interest rate risk, and may be
subject to varying degrees of credit risk. U.S. Government securities may
include zero coupon securities, which do not distribute interest on a current
basis and tend to be subject to greater market risk than interest-paying
securities of similar maturities.

Corporate Debt Securities

Corporate debt securities are subject to the risk of the issuer's inability
to meet principal and interest payments on the obligation and may also be
subject to price volatility due to such factors as interest rate sensitivity,
market perception of the credit-worthiness of the issuer and general market
liquidity. When interest rates rise, the value of corporate debt securities can
be expected to decline. Debt securities with longer maturities tend to be more
sensitive to interest rate movements than those with shorter maturities.

Convertible Securities

Each Portfolio may invest in convertible securities. Convertible
securities are generally preferred stocks and other securities, including fixed
income securities and warrants, that are convertible into or exercisable for
common stock at a stated price or rate. The price of a convertible security
will normally vary in some proportion to changes in the price of the underlying
common stock because of this conversion or exercise feature. However, the value
of a convertible security may not increase or decrease as rapidly as the
underlying common stock. A convertible security will normally also provide
income and is subject to interest rate risk. Convertible securities may be
lower-rated securities subject to greater levels of credit risk. A Portfolio
may be forced to convert a security before it would otherwise choose, which may
have an adverse effect on the Portfolio's ability to achieve its investment
objective.

While some countries or companies may be regarded as favorable investments,
pure fixed income opportunities may be unattractive or limited due to
insufficient supply, or legal or technical restrictions. In such cases, a
Portfolio may consider equity securities or convertible securities to gain
exposure to such investments.

Variable and Floating Rate Securities

Variable and floating rate securities provide for a periodic adjustment in
the interest rate paid on the obligations. Each of the Fixed Income Portfolios
may invest in floating rate debt instruments ("floaters") and (except for the
Money Market Portfolio) engage in credit spread trades. While floaters provide a
certain degree of protection against rises in interest rates, a Portfolio will
participate in any declines in interest rates as well. Each Portfolio may also
invest in inverse floating rate debt instruments ("inverse floaters"). An
inverse floater may exhibit greater price volatility than a fixed rate
obligation of similar credit quality. A Portfolio may not invest more than 5% of
its net assets in any combination of inverse floater, interest only, or
principal only securities.

Inflation-Indexed Bonds

Inflation-indexed bonds are fixed income securities whose principal value
is periodically adjusted according to the rate of inflation. If the index
measuring inflation falls, the principal value of inflation-indexed bonds will
be adjusted downward, and consequently the interest payable on these securities
(calculated with respect to a smaller principal amount) will be reduced.
Repayment of the original bond principal upon maturity (as adjusted for
inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds.
For bonds that do not provide a similar guarantee, the adjusted principal value
of the bond repaid at maturity may be less than the original principal. The
value of inflation-indexed bonds is expected to change in response to changes in
real interest rates. Real interest rates are tied to the relationship between
nominal interest rates and the rate of inflation. If nominal interest rates
increase at a faster rate than inflation, real interest rates may rise, leading
to a decrease in value of inflation-indexed bonds. Short-term increases in
inflation may lead to a decline in value. Any increase in the principal amount
of an inflation-indexed bond will be considered taxable ordinary income, even
though investors do not receive their principal until maturity.

Prospectus 42
<PAGE>

Mortgage-Related and Other Asset-Backed Securities

Each Portfolio (except the Money Market Portfolio) may invest all of its
assets in mortgage- and asset-backed securities. The value of some mortgage- or
asset-backed securities may be particularly sensitive to changes in prevailing
interest rates. Early repayment of principal on some mortgage-related
securities may expose a Portfolio to a lower rate of return upon reinvestment of
principal. When interest rates rise, the value of a mortgage-related security
generally will decline; however, when interest rates are declining, the value of
mortgage-related securities with prepayment features may not increase as much as
other fixed income securities. The rate of prepayments on underlying mortgages
will affect the price and volatility of a mortgage-related security, and may
shorten or extend the effective maturity of the security beyond what was
anticipated at the time of purchase. If unanticipated rates of prepayment on
underlying mortgages increase the effective maturity of a mortgage-related
security, the volatility of the security can be expected to increase. The value
of these securities may fluctuate in response to the market's perception of the
creditworthiness of the issuers. Additionally, although mortgages and mortgage-
related securities are generally supported by some form of government or private
guarantee and/or insurance, there is no assurance that private guarantors or
insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the
mortgage assets (the interest-only, or "IO" class), while the other class will
receive all of the principal (the principal-only, or "PO" class). The yield to
maturity on an IO class is extremely sensitive to the rate of principal payments
(including prepayments) on the underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on a Portfolio's yield to
maturity from these securities. A Portfolio may not invest more than 5% of its
net assets in any combination of IO, PO, or inverse floater securities. The
Portfolios may invest in other asset-backed securities that have been offered to
investors.

Foreign (Non-U.S.) Securities

Each of the Fixed Income Portfolios (except the Total Return Bond II and
Long-Term U.S. Government Portfolios) may invest directly in fixed income
securities of non-U.S. issuers. The Money Market and High Yield Bond Portfolios
may only invest in U.S. dollar-denominated fixed income securities of non-U.S.
issuers. The StocksPLUS Growth and Income Portfolio may invest directly in
foreign equity securities.

Investing in the securities of issuers in any foreign country involves
special risks and considerations not typically associated with investing in U.S.
companies. Shareholders should consider carefully the substantial risks
involved for Portfolios that invest in securities issued by foreign companies
and governments of foreign countries. These risks include: differences in
accounting, auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations; and political instability.
Individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross domestic product, rates of
inflation, capital reinvestment, resources, self-sufficiency and balance of
payments position. The securities markets, values of securities, yields and
risks associated with foreign securities markets may change independently of
each other. Also, foreign securities and dividends and interest payable on those
securities may be subject to foreign taxes, including taxes withheld from
payments on those securities. Foreign securities often trade with less frequency
and volume than domestic securities and therefore may exhibit greater price
volatility. Investments in foreign securities may also involve higher custodial
costs than domestic investments and additional transaction costs with respect to
foreign currency conversions. Changes in foreign exchange rates also will
affect the value of securities denominated or quoted in foreign currencies.

Certain Portfolios also may invest in sovereign debt issued by governments,
their agencies or instrumentalities, or other government-related entities.
Holders of sovereign debt may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. In addition,
there is no bankruptcy proceeding by which defaulted sovereign debt may be
collected.

Emerging Market Securities. Certain of the Portfolios, and particularly
the Emerging Markets Bond Portfolio, may invest primarily in securities of
issuers based in countries with developing (or "emerging market") economies.
Investing in emerging market securities imposes risks different from, or greater
than, risks of investing in domestic securities or in foreign, developed
countries. These risks include: smaller market capitalization of securities
markets, which may suffer periods of relative illiquidity; significant price
volatility; restrictions on foreign investment; possible repatriation of
investment income and capital. In addition, foreign investors may be required
to register the proceeds of sales; future economic or political crises could
lead to price controls, forced mergers, expropriation or confiscatory taxation,
seizure,

43 PIMCO Variable Insurance Trust
<PAGE>

nationalization, or creation of government monopolies. The currencies of
emerging market countries may experience significant declines against the U.S.
dollar, and devaluation may occur subsequent to investments in these currencies
by a Portfolio. Inflation and rapid fluctuations in inflation rates have had,
and may continue to have, negative effects on the economies and securities
markets of certain emerging market countries.

Additional risks of emerging markets securities may include: greater
social, economic and political uncertainty and instability; more substantial
governmental involvement in the economy; less governmental supervision and
regulation; unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers; and less developed legal systems. In addition, emerging securities
markets may have different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions or otherwise make
it difficult to engage in such transactions. Settlement problems may cause a
Portfolio to miss attractive investment opportunities, hold a portion of its
assets in cash pending investment, or be delayed in disposing of a portfolio
security. Such a delay could result in possible liability to a purchaser of the
security.

Each of the Fixed Income Portfolios (except the PIMCO Total Return Bond II
and Long-Term U.S. Government Portfolios) may invest in Brady Bonds, which are
securities created through the exchange of existing commercial bank loans to
sovereign entities for new obligations in connection with a debt restructuring.
Investments in Brady Bonds may be viewed as speculative. Brady Bonds acquired
by a Portfolio may be subject to restructuring arrangements or to requests for
new credit, which may cause the Portfolio to suffer a loss of interest or
principal on any of its holdings.

Foreign (Non-U.S.) Currencies

A Portfolio that invests directly in foreign currencies or in securities
that trade in, or receive revenues in, foreign currencies will be subject to
currency risk. Foreign currency exchange rates may fluctuate significantly over
short periods of time. They generally are determined by supply and demand in the
foreign exchange markets and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other complex
factors. Currency exchange rates also can be affected unpredictably by
intervention (or the failure to intervene) by U.S. or foreign governments or
central banks, or by currency controls or political developments. For example,
significant uncertainty surrounds the recent introduction of the euro (a common
currency unit for the European Union) in January 1999 and the effect it may have
on the value of securities denominated in local European currencies. These and
other currencies in which the Portfolios' assets are denominated may be devalued
against the U.S. dollar, resulting in a loss to the Portfolios.

Foreign Currency Transactions. Portfolios that invest in securities
denominated in foreign currencies may enter into forward foreign currency
exchange contracts and invest in foreign currency futures contracts and options
on foreign currencies and futures. A forward foreign currency exchange
contract, which involves an obligation to purchase or sell a specific currency
at a future date at a price set at the time of the contract, reduces a
Portfolio's exposure to changes in the value of the currency it will deliver and
increases its exposure to changes in the value of the currency it will receive
for the duration of the contract. The effect on the value of a Portfolio is
similar to selling securities denominated in one currency and purchasing
securities denominated in another currency. A contract to sell foreign currency
would limit any potential gain which might be realized if the value of the
hedged currency increases. A Portfolio may enter into these contracts to hedge
against foreign exchange risk, to increase exposure to a foreign currency or to
shift exposure to foreign currency fluctuations from one currency to another.
Suitable hedging transactions may not be available in all circumstances and
there can be no assurance that a Portfolio will engage in such transactions at
any given time or from time to time. Also, such transactions may not be
successful and may eliminate any chance for a Portfolio to benefit from
favorable fluctuations in relevant foreign currencies. A Portfolio may use one
currency (or a basket of currencies) to hedge against adverse changes in the
value of another currency (or a basket of currencies) when exchange rates
between the two currencies are positively correlated. The Portfolio will
segregate assets determined to be liquid by PIMCO in accordance with procedures
established by the Board of Trustees to cover its obligations under forward
foreign currency exchange contracts entered into for non-hedging purposes.

High Yield Securities ("Junk Bonds")

Securities rated lower than Baa by Moody's Investors Service, Inc.
("Moody's") or lower than BBB by Standard & Poor's Ratings Services ("S&P") are
sometimes referred to as "high yield" or "junk" bonds. Investing in high yield
securities involves special risks in addition to the risks associated with
investments in higher-rated fixed income securities.

Prospectus 44
<PAGE>

While offering a greater potential opportunity for capital appreciation and
higher yields, high yield securities typically entail greater potential price
volatility and may be less liquid than higher-rated securities. High yield
securities may be regarded as predominately speculative with respect to the
issuer's continuing ability to meet principal and interest payments. They may
also be more susceptible to real or perceived adverse economic and competitive
industry conditions than higher-rated securities.

Credit Ratings and Unrated Securities. Rating agencies are private services
that provide ratings of the credit quality of fixed income securities, including
convertible securities. Appendix A to this Offering Memorandum describes the
various ratings assigned to fixed income securities by Moody's and S&P. Ratings
assigned by a rating agency are not absolute standards of credit quality and do
not evaluate market risks. Rating agencies may fail to make timely changes in
credit ratings and an issuer's current financial condition may be better or
worse than a rating indicates. A Portfolio will not necessarily sell a security
when its rating is reduced below its rating at the time of purchase. PIMCO does
not rely solely on credit ratings, and develops its own analysis of issuer
credit quality.

A Portfolio may purchase unrated securities (which are not rated by a
rating agency) if its portfolio manager determines that the security is of
comparable quality to a rated security that the Portfolio may purchase. Unrated
securities may be less liquid than comparable rated securities and involve the
risk that the portfolio manager may not accurately evaluate the security's
comparative credit rating. Analysis of the creditworthiness of issuers of high
yield securities may be more complex than for issuers of higher-quality fixed
income securities. To the extent that a Portfolio invests in high yield and/or
unrated securities, the Portfolio's success in achieving its investment
objective may depend more heavily on the portfolio manager's creditworthiness
analysis than if the Portfolio invested exclusively in higher-quality and rated
securities.

Derivative Instruments

Each Portfolio (except the PIMCO Money Market Portfolio) may, but is not
required to, use derivative instruments for risk management purposes or as part
of its investment strategies. Generally, derivatives are financial contracts
whose value depends upon, or is derived from, the value of an underlying asset,
reference rate or index, and may relate to stocks, bonds, interest rates,
currencies or currency exchange rates, commodities, and related indexes.
Examples of derivative instruments include options contracts, futures contracts,
options on futures contracts and swap agreements. Each Portfolio may invest all
of its assets in derivative instruments, subject to the Portfolio's objective
and policies. A portfolio manager may decide not to employ any of these
strategies and there is no assurance that any derivatives strategy used by a
Portfolio will succeed. A description of these and other derivative instruments
that the Portfolios may use are described under "Investment Objectives and
Policies" in the Statement of Additional Information.

A Portfolio's use of derivative instruments involves risks different from,
or greater than, the risks associated with investing directly in securities and
other more traditional investments. A description of various risks associated
with particular derivative instruments is included in "Investment Objectives and
Policies" in the Statement of Additional Information. The following provides a
more general discussion of important risk factors relating to all derivative
instruments that may be used by the Portfolios.

Management Risk. Derivative products are highly specialized instruments
that require investment techniques and risk analyses different from those
associated with stocks and bonds. The use of a derivative requires an
understanding not only of the underlying instrument but also of the derivative
itself, without the benefit of observing the performance of the derivative under
all possible market conditions.

Credit Risk. The use of a derivative instrument involves the risk that a
loss may be sustained as a result of the failure of another party to the
contract (usually referred to as a "counterparty") to make required payments or
otherwise comply with the contract's terms.

Liquidity Risk. Liquidity risk exists when a particular derivative
instrument is difficult to purchase or sell. If a derivative transaction is
particularly large or if the relevant market is illiquid (as is the case with
many privately negotiated derivatives), it may not be possible to initiate a
transaction or liquidate a position at an advantageous time or price.

Leverage Risk. Because many derivatives have a leverage component, adverse
changes in the value or level of the underlying asset, reference rate or index
can result in a loss substantially greater than the amount invested in the
derivative itself. Certain derivatives have the potential for unlimited loss,
regardless of the size of the initial investment. When a

45 PIMCO Variable Insurance Trust
<PAGE>

Portfolio uses derivatives for leverage, investments in that Portfolio will tend
to be more volatile, resulting in larger gains or losses in response to market
changes. To limit leverage risk, each Portfolio will segregate assets determined
to be liquid by PIMCO in accordance with procedures established by the Board of
Trustees (or, as permitted by applicable regulation, enter into certain
offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative
instruments (including markets located in foreign countries) are relatively new
and still developing, suitable derivatives transactions may not be available in
all circumstances for risk management or other purposes. There is no assurance
that a Portfolio will engage in derivatives transactions at any time or from
time to time. A Portfolio's ability to use derivatives may also be limited by
certain regulatory and tax considerations.

Market and Other Risks. Like most other investments, derivative
instruments are subject to the risk that the market value of the instrument will
change in a way detrimental to a Portfolio's interest. If a portfolio manager
incorrectly forecasts the values of securities, currencies or interest rates or
other economic factors in using derivatives for a Portfolio, the Portfolio might
have been in a better position if it had not entered into the transaction at
all. While some strategies involving derivative instruments can reduce the risk
of loss, they can also reduce the opportunity for gain or even result in losses
by offsetting favorable price movements in other Portfolio investments. A
Portfolio may also have to buy or sell a security at a disadvantageous time or
price because the Portfolio is legally required to maintain offsetting positions
or asset coverage in connection with certain derivatives transactions.

Other risks in using derivatives include the risk of mispricing or improper
valuation of derivatives and the inability of derivatives to correlate perfectly
with underlying assets, rates and indexes. Many derivatives, in particular
privately negotiated derivatives, are complex and often valued subjectively.
Improper valuations can result in increased cash payment requirements to
counterparties or a loss of value to a Portfolio. Also, the value of
derivatives may not correlate perfectly, or at all, with the value of the
assets, reference rates or indexes they are designed to closely track. In
addition, a Portfolio's use of derivatives may cause the Portfolio to realize
higher amounts of short-term capital gains (generally taxed at ordinary income
tax rates) than if the Portfolio had not used such instruments.

Loan Participations and Assignments

The Portfolios may invest in fixed- and floating-rate loans, which
investments generally will be in the form of loan participations and assignments
of portions of such loans. Participations and assignments involve special types
of risk, including credit risk, interest rate risk, liquidity risk, and the
risks of being a lender. If a Portfolio purchases a participation, it may only
be able to enforce its rights through the lender, and may assume the credit risk
of the lender in addition to the borrower.

Delayed Funding Loans and Revolving Credit Facilities

The Portfolios may also enter into, or acquire participations in, delayed
funding loans and revolving credit facilities, in which a lender agrees to make
loans up to a maximum amount upon demand by the borrower during a specified
term. These commitments may have the effect of requiring a Portfolio to
increase its investment in a company at a time when it might not otherwise
decide to do so (including at a time when the company's financial condition
makes it unlikely that such amounts will be repaid). To the extent that a
Portfolio is committed to advance additional funds, it will segregate assets
determined to be liquid by PIMCO in accordance with procedures established by
the Board of Trustees in an amount sufficient to meet such commitments. Delayed
funding loans and revolving credit facilities are subject to credit, interest
rate and liquidity risk and the risks of being a lender.

Loans of Portfolio Securities

For the purpose of achieving income, each Portfolio may lend its portfolio
securities to brokers, dealers, and other financial institutions provided a
number of conditions are satisfied, including that the loan is fully
collateralized. Please see "Investment Objectives and Policies" in the
Statement of Additional Information for details. When a Portfolio lends
portfolio securities, its investment performance will continue to reflect
changes in the value of the securities loaned, and the Portfolio will also
receive a fee or interest on the collateral. Securities lending involves the
risk of loss of rights in the collateral or delay in recovery of the collateral
if the borrower fails to return the security loaned or becomes insolvent. A
Portfolio may pay lending fees to a party arranging the loan.

Prospectus 46
<PAGE>

Short Sales

Each Portfolio may make short sales as part of its overall portfolio
management strategies or to offset a potential decline in value of a security.
A short sale involves the sale of a security that is borrowed from a broker or
other institution to complete the sale. For these purposes, a Portfolio may also
hold or have the right to acquire securities which, without the payment of any
further consideration, are convertible into or exchangeable for the securities
sold short. Short sales expose a Portfolio to the risk that it will be required
to acquire, convert or exchange securities to replace the borrowed securities
(also known as "covering" the short position) at a time when the securities sold
short have appreciated in value, thus resulting in a loss to the Portfolio. A
Portfolio making a short sale (other than a "short sale against the box") must
segregate assets determined to be liquid by PIMCO in accordance with procedures
established by the Board of Trustees or otherwise cover its position in a
permissible manner.

When-Issued, Delayed Delivery and Forward Commitment Transactions

Each Portfolio may purchase securities which it is eligible to purchase on
a when-issued basis, may purchase and sell such securities for delayed delivery
and may make contracts to purchase such securities for a fixed price at a future
date beyond normal settlement time (forward commitments). When-issued
transactions, delayed delivery purchases and forward commitments involve a risk
of loss if the value of the securities declines prior to the settlement date.
This risk is in addition to the risk that the Portfolio's other assets will
decline in the value. Therefore, these transactions may result in a form of
leverage and increase a Portfolio's overall investment exposure. Typically, no
income accrues on securities a Portfolio has committed to purchase prior to the
time delivery of the securities is made, although a Portfolio may earn income on
securities it has segregated to cover these positions.

Repurchase Agreements

Each Portfolio may enter into repurchase agreements, in which the Portfolio
purchases a security from a bank or broker-dealer and agrees to repurchase the
security at the Portfolio's cost plus interest within a specified time. If the
party agreeing to repurchase should default, the Portfolio will seek to sell the
securities which it holds. This could involve procedural costs or delays in
addition to a loss on the securities if their value should fall below their
repurchase price. Repurchase agreements maturing in more than seven days are
considered illiquid securities.

Reverse Repurchase Agreements, Dollar Rolls And Other Borrowings

Each Portfolio may enter into reverse repurchase agreements and dollar
rolls, subject to the Portfolio's limitations on borrowings. A reverse
repurchase agreement or dollar roll involves the sale of a security by a
Portfolio and its agreement to repurchase the instrument at a specified time and
price, and may be considered a form of borrowing for some purposes. A Portfolio
will segregate assets determined to be liquid by PIMCO in accordance with
procedures established by the Board of Trustees to cover its obligations under
reverse repurchase agreements. A Portfolio also may borrow money for investment
purposes subject to any policies of the Portfolio currently described in this
Prospectus or in the Statement of Additional Information. Reverse repurchase
agreements, dollar rolls and other forms of borrowings may create leveraging
risk for a Portfolio.

Event-Linked Bonds

The Portfolios (except the Money Market Portfolio) may invest in "event-linked
bonds," which are fixed income securities for which the return of principal and
payment of interest is contingent on the non-occurrence of a specific "trigger"
event, such as a hurricane, earthquake or other physical or weather-related
phenomenon. If a trigger event occurs, a Portfolio may lose a portion or all of
its principal invested in the bond. Event-linked bonds often provide for an
extension of maturity to process and audit loss claims where a trigger event
has, or possibly has, occurred. Event-linked bonds may also expose the
Portfolio to certain unanticipated risks including but not limited to issuer
(credit) default, adverse regulatory or jurisdictional interpretation, and
adverse tax consequences. Event-linked bonds may also be subject to liquidity
risk.

Portfolio Turnover

The length of time a Portfolio has held a particular security is not
generally a consideration in investment decisions. A change in the securities
held by a Portfolio is known as "portfolio turnover." Each Portfolio may engage
in frequent and

47 PIMCO Variable Insurance Trust
<PAGE>

active trading of portfolio securities to achieve its investment objective,
particularly during periods of volatile market movements. High portfolio
turnover (e.g., over 100%) involves correspondingly greater expenses to a
Portfolio, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and reinvestments in other
securities. Such sales may also result in realization of taxable capital gains,
including short-term capital gains (which are generally taxed at ordinary income
tax rates). The trading costs and tax effects associated with portfolio turnover
may adversely effect the Portfolio's performance.

Temporary Defensive Positions

For temporary, defensive or emergency purposes, the Portfolios may invest
without limit in U.S. debt securities, including short-term money market
securities, when in the opinion of PIMCO it is appropriate to do so. When a
Portfolio engages in such strategies, it may not achieve its investment
objective.

Illiquid Securities

The Portfolios may invest up to 15% of their net assets in illiquid
securities (10% in the case of the Money Market Portfolio). Certain illiquid
securities may require pricing at fair value as determined in good faith under
the supervision of the Board of Trustees. A portfolio manager may be subject to
significant delays in disposing of illiquid securities, and transactions in
illiquid securities may entail registration expenses and other transaction costs
that are higher than those for transactions in liquid securities. The term
"illiquid securities" for this purpose means securities that cannot be disposed
of within seven days in the ordinary course of business at approximately the
amount at which a Portfolio has valued the securities. Restricted securities,
i.e., securities subject to legal or contractual restrictions on resale, may be
illiquid. However, some restricted securities (such as securities issued
pursuant to Rule 144A under the Securities Act of 1933 and certain commercial
paper) may be treated as liquid, although they may be less liquid than
registered securities traded on established secondary markets.

Investment in Other Investment Companies

Each Portfolio may invest up to 10% of its assets in securities of other
investment companies, such as closed-end management investment companies, or in
pooled accounts or other investment vehicles which invest in foreign markets;
provided, however, that each Portfolio may invest in money market funds advised
by PIMCO or its affiliates to the extent permitted by any regulatory authority
having jurisdiction. Subject to the restrictions and limitations of the 1940
Act, each Portfolio may, in the future, elect to pursue its investment objective
by investing in one or more underlying investment vehicles or companies that in
turn invest in the securities described in its Portfolio Summary and whose
shares may be offered to other parties as well as the Portfolio. As a
shareholder of an investment company, a Portfolio may indirectly bear service
and other fees which are in addition to the fees the Portfolio pays its service
providers.

Year 2000 Disclosure

Many of the services provided to the Portfolios depend on the smooth
functioning of computer systems. Some systems in use today cannot distinguish
between the year 1900 and the year 2000. Should any of the service systems fail
to process information properly, that could have an adverse impact on the
Portfolios' operations and services provided to shareholders. PIMCO, the
Custodian, and certain other service providers to the Portfolios have reported
that they have mitigated the risks associated with the so-called "year 2000
problem." However, there can be no assurance that the problem is corrected in
all respects and that the Portfolios' operations and services provided to
shareholders will not be adversely effected, nor can there be any assurance that
the year 2000 problem will not have an adverse effect on the entities whose
securities are held by the Portfolios or on domestic or global markets or
economies, generally.

FINANCIAL HIGHLIGHTS

This financial highlights table is intended to help you understand the
Portfolios' financial performance for the period of their operations.
Information is presented for each Portfolio that had investment operations
during the reporting period. Certain information reflects financial results for
a single portfolio share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the Portfolio
(assuming reinvestment of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, the Portfolios' independent
auditors. Their report, along with full financial statements, appears in the
Trust's Annual Report, which is available upon request.

Prospectus 48
<PAGE>

<TABLE>
<CAPTION>
Total Return High Yield
Bond Bond StocksPLUS Growth
Selected Per Share Data for the Period Ended: December 31, 1999 Portfolio(a) Portfolio(b) and Income Portfolio(c)
[TO BE UPDATED] --------------- ------------- -----------------------
<S> <C> <C> <C>
Net asset value, beginning of period................................. $10.00 $ 10.00 $ 10.00
Income from Investment Operations
Net investment income(d)............................................. 0.56 0.51 0.30
Net gains or losses on securities (both realized and unrealized)(d).. 0.28 (0.34) 2.68
Total from investment operations..................................... 0.84 0.17 2.98
Less Distributions
Dividends (from net investment income)............................... (0.56) (0.50) (0.29)
Distributions (from capital gains)................................... (0.19) 0.00 (0.11)
Total distributions.................................................. (0.75) (0.50) (0.40)
Net asset value, end of period....................................... $10.09 $ 9.67 $ 12.58
Total return (%)..................................................... 8.61% 1.80% 30.11%
Ratios/Supplemental Data
Net assets, end of period (000's).................................... $3,259 $49,761 $58,264
Ratio of expenses to average net assets (%)(e)....................... 0.65% 0.75%* 0.65
Ratio of net investment income to average net assets (%)(e).......... 5.55% 7.90%* 5.30%
Portfolio turnover rate (%).......................................... 138.72% 12.94% 60.64%
</TABLE>

* Annualized

(a) Commenced operations on December 31, 1997.

(b) Commenced operations on April 30, 1998.

(d) Per share amounts based on average number of shares outstanding during the
period.

(e) Prior to the waiver and reimbursement of expenses, the ratios of expenses to
average net assets were 0.75%, 0.81% and 0.72% and the ratios of net
investment income to average net assets were 5.45%, 7.84% and 5.23% for the
Total Return Bond, High Yield Bond and StocksPLUS Growth and Income
Portfolios, respectively.

49 PIMCO Variable Insurance Trust
<PAGE>

Other Information

Performance Information of Similar Funds

The following table provides information concerning the historical total
return performance of the Institutional Class shares of certain series of PIMCO
Funds: Pacific Investment Management Series ("PIMS"). Each PIMS series has
investment objectives, policies and strategies substantially similar to those of
its respective Portfolio and is currently managed by the same portfolio manager.
While the investment objectives and policies of each PIMS series and its
respective Portfolio are similar, they are not identical and the performance of
the PIMS series and the Portfolio will vary. The data is provided to illustrate
the past performance of the PIMCO in managing a substantially similar investment
portfolio and does not represent the past performance of any of the Portfolios
or the future performance of any Portfolio or its portfolio manager.
Consequently, potential investors should not consider this performance data as
an indication of the future performance of any Portfolio or of PIMCO.

The performance data shown below reflects the operating expenses of each
PIMS series, which for all series except the StocksPLUS Portfolio are lower than
the expenses of the corresponding Portfolio. Performance would have been lower
for those series if the Portfolios' expenses were used. In addition, the PIMS
series, unlike the Portfolios, are not sold to Separate Accounts to fund
Variable Contracts. As a result, the performance results presented below do not
take into account charges or deductions against a Separate Account or Variable
Contract for cost of insurance charges, premium loads, administrative fees,
maintenance fees, premium taxes, mortality and expense risk charges, or other
charges that may be incurred under a Variable Contract for which the Portfolio
serves as an underlying investment vehicle. By contrast, Variable Contract
Owners with contract value allocated to the Portfolios will be subject to
charges and expenses relating to the Variable Contracts and Separate Accounts.

Each PIMS series' performance data shown below is calculated in accordance
with standards prescribed by the SEC for the calculation of average annual total
return information. The investment results of the PIMS series presented below
are unaudited and are not intended to predict or suggest results that might be
experienced by the PIMS series or the Portfolios. Share prices and investment
returns will fluctuate reflecting market conditions, as well as changes in
company-specific fundamentals of portfolio securities. The performance data for
the benchmark indices identified below does not reflect the fees or expenses of
the PIMS series or the Portfolios.

Average Annual Total Return for Similar Series of PIMS
and for Benchmark Indices for Periods Ended December 31, 1999 [TO BE UPDATED]

<TABLE>
<CAPTION>
1 3 5 Since Inception
Year Years Years Inception Date
----- ------ ------ --------- ---------
<S> <C> <C> <C> <C> <C>
PIMCO Money Market Fund/1/......................................... 5.34% 5.32% 5.19% 4.70% 3/1/91
Salomon 3-Month Treasury Bill/2/.................................. 5.07 5.07 4.90

PIMCO Short-Term Fund.............................................. 5.74 6.42 6.25 6.52 10/7/87
Salomon 3-Month Treasury Bill/2/.................................. 5.07 5.07 4.90

PIMCO Low Duration Fund............................................ 7.16 7.18 6.76 8.31 5/11/87
Merrill Lynch 1-3 yr. Treasury/3/................................. 7.00 6.21 5.99

PIMCO Real Return Bond Fund........................................ 5.21 N/A N/A 4.83 1/29/97
Lehman Inflation Linked Treasury/4/............................... 3.95 N/A N/A

PIMCO Total Return Fund............................................ 9.77 8.18 7.89 9.89 5/11/87
Lehman Aggregate Bond/5/.......................................... 8.69 7.29 7.27

PIMCO Total Return Fund II......................................... 9.63 7.79 7.82 8.49 12/30/91
Lehman Aggregate Bond/5/.......................................... 8.69 7.29 7.27

PIMCO High Yield Fund.............................................. 6.54 10.44 10.73 11.97 12/16/92
Lehman BB Int. Corporate/6/....................................... 5.74 8.77 9.09
</TABLE>
Prospectus 50
<PAGE>

<TABLE>
<S> <C> <C> <C> <C> <C>
PIMCO Long-Term U.S. Government Fund............................... 13.40 9.52 9.87 13.05 7/1/91
Lehman Long-Term Treasury/7/...................................... 12.75 8.64 8.95

PIMCO Global Bond Fund/8/.......................................... 12.50 7.14 8.25 8.84 11/23/93
J. P. Morgan Global (Unhedged)/9/................................. 15.30 6.87 8.08

PIMCO Foreign Bond Fund/10/........................................ 10.03 12.76 10.01 11.17 12/3/92
J. P. Morgan Non-U.S. (Hedged)/11/................................ 12.09 11.86 9.45

PIMCO Emerging Markets Bond Fund................................... -11.76 N/A N/A -10.26 7/31/97
J.P. Morgan Emerging Markets/12/.................................. -14.35 N/A N/A

PIMCO Strategic Balanced Fund...................................... 19.66 N/A N/A 21.78 6/28/96
S & P 500/13/..................................................... 15.03 N/A N/A

PIMCO StocksPLUS Fund.............................................. 28.32 28.02 24.85 23.61 5/14/93
S & P 500/13/..................................................... 28.58 28.23 24.06
</TABLE>
- -----------------
(Footnotes on following page)

/1/ Prior to November 1, 1995, the Money Market Portfolio was managed by a
different portfolio manager.

/2/ The Salomon 3-Month Treasury Bill Index is an unmanaged index representing
monthly return equivalents of yield averages of the last 3 month Treasury
Bill issues. It is not possible to invest directly in the index.

/3/ The Merrill Lynch 1-3 Year Treasury Index consists of all public U.S.
Treasury obligations having maturities from one to 2.99 years. The Index
includes income and distributions but does not reflect fees, brokerage
commissions or other expenses of investing.

/4/ The Lehman Brothers Inflation Linked Treasury Index is an unmanaged market
index consisting of the U.S. Treasury Inflation Protected Securities
("TIPS") universe. The Index includes income and distributions but does not
reflect fees, brokerage commissions or other expenses of investing.

/5/ The Lehman Brothers Aggregate Bond Index consists of the Lehman Brothers
Government/Corporate Bond Index, the Lehman Brothers Mortgage-Backed
Securities Index, and the Lehman Brothers Asset-Backed Securities Index.
The Government/Corporate Bond Index consists of the Lehman Brothers
Government Bond Index and the Lehman Brothers Corporate Bond Index. The
Government Bond Index includes all public obligations of the U.S. Treasury
(excluding flower bonds and foreign-targeted issues), its agencies and
quasi-federal corporations, and corporate debt guaranteed by the U.S.
Government. The Corporate Bond Index includes all publicly issued, fixed
rate, non-convertible investment grade U.S. dollar denominated corporate
debt registered with the SEC; it also includes debt issued or guaranteed by
foreign sovereign governments, municipalities, and governmental or
international agencies. The Mortgage-Backed Securities Index consists of
15-and 30-year fixed rate securities backed by mortgage pools of the
Government National Mortgage Association, the Federal Home Loan Mortgage
Corporation and the Federal National Mortgage Association (excluding
buydowns, manufactured homes and graduated equity mortgages). The Asset-
Backed Securities Index consists of credit card, auto and home equity loans
(excluding subordinated tranches) with an average life of one year. Each
Index includes income and distributions but does not reflect fees,
brokerage commissions or other expenses of investing.

/6/ The Lehman Brothers BB Intermediate Corporate Index is an unmanaged market
index comprised of various fixed income securities rated BB. The Index
includes income and distributions but does not reflect fees, brokerage
commissions or other expenses of investing.

/7/ The Lehman Long-Term Treasury Index is an unmanaged index of U.S. Treasury
issues with maturities greater than 10 years. It is not possible to invest
directly in the index.

/8/ Prior to July 13, 1995, the Global Bond Portfolio was managed by a
different portfolio manager.

/9/ The J.P. Morgan Global Index (Unhedged) is an unmanaged market index
representative of the total return performance in U.S. dollars on an
unhedged basis of major world bond markets. The Index includes income and
distributions but does not reflect fees, brokerage commissions or other
expenses of investing.

/10/ Prior to July 13, 1995, the Foreign Bond Portfolio was managed by a
different portfolio manager.

/11/ The J.P. Morgan Non-U.S. Index (Hedged) is an unmanaged market index
representative of the total return performance in U.S. dollars of major
non-U.S. bond markets. The Index includes income and distributions but does
not reflect fees, brokerage commissions or other expenses of investing.

/12/ The J.P. Morgan Emerging Markets Bond Index is an unmanaged market index
which tracks the total returns for Brady Bonds. The Index includes income
and distributions but does not reflect fees, brokerage commissions or other
expenses of investing.

/13/ The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of common stocks. It is not possible to invest directly in the index.

51 PIMCO Variable Insurance Trust
<PAGE>

APPENDIX A

DESCRIPTION OF SECURITIES RATINGS

A Portfolio's investments may range in quality from securities rated in the
lowest category in which the Portfolio is permitted to invest to securities
rated in the highest category (as rated by Moody's or S&P or, if unrated,
determined by PIMCO to be of comparable quality). The percentage of a
Portfolio's assets invested in securities in a particular rating category will
vary. Following is a description of Moody's and S&P's ratings applicable to
fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than with Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
that suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classified from Aa through B in its corporate bond rating system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.

Prospectus 52
<PAGE>

Corporate Short-Term Debt Ratings

Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations which have an original maturity not
exceeding one year. Obligations relying upon support mechanisms such as letters
of credit and bonds of indemnity are excluded unless explicitly rated.

Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers:

PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structure with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.

PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime
rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

53 PIMCO Variable Insurance Trust
<PAGE>

Speculative Grade

Debt rated BB, B, CCC, CC, and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category also is used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B: Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category also is
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB-rating.

CCC: Debt rated CCC has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category also is
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.

CC: The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC-debt rating. The C rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is
being paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

Provisional ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the debt being rated and indicates that payment of
debt service requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while addressing
credit quality after completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise his own judgment with respect to such likelihood and
risk.

r: The "r" is attached to highlight derivative, hybrid, and certain other
obligations that S&P believes may experience high volatility or high variability
in expected returns due to non-credit risks. Examples of such obligations are:
securities whose principal or interest return is indexed to equities,
commodities, or currencies; certain swaps and options; and interest only and
principal only mortgage securities.

The absence of an "r" symbol should not be taken as an indication that an
obligation will exhibit no volatility or variability in total return.

Prospectus 54
<PAGE>

N.R.: Not rated.

Debt obligations of issuers outside the United States and its territories
are rated on the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.

Commercial Paper Rating Definitions

A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Ratings are graded into several categories, ranging from A for the
highest quality obligations to D for the lowest. These categories are as
follows:

A-1: This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

A-3: Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes
in circumstances than obligations carrying the higher designations.

B: Issues rated B are regarded as having only speculative capacity for
timely payment.

C: This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.

D: Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due,
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period.

A commercial paper rating is not a recommendation to purchase, sell or hold
a security inasmuch as it does not comment as to market price or suitability for
a particular investor. The ratings are based on current information furnished to
Standard & Poor's by the issuer or obtained from other sources it considers
reliable. Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information.

55 PIMCO Variable Insurance Trust
<PAGE>

LOGO

PIMCO
Variable
Insurance
Trust

<TABLE>
<S> <C> <C>
For More Information To request a free copy Information about the
of these documents or Trust (including the
The following documents are to make inquiries SAI) can be reviewed
available that offer about the Portfolios, and copied at the
further information on the please write or call: Securities and
Portfolios of PIMCO Exchange Commission's
Variable Insurance Trust. PIMCO Variable Public Reference Room
Insurance Trust in Washington, D.C.
Annual/Semi-Annual Reports 840 Newport Center Information on the
to Shareholders The Trust's Drive operation of the
annual and semi-annual Suite 300 public reference room
reports include a Newport Beach, CA 92660 may be obtained by
discussion of the market calling the Commission
conditions and investment Telephone: at 1-800-SEC-0330.
strategies that 1-888-746-2688 Reports and other
significantly affected the information about the
Portfolios' performance Trust are available on
during its last fiscal year the Commission's
or other period. Internet site at
www.sec.gov, and
Statement of Additional copies of that
Information (SAI) The SAI information may be
contains additional obtained, upon payment
information about the of a duplicating fee,
Portfolios. A current SAI by writing the Public
has been filed with the Reference Section of
Securities and Exchange the Commission,
Commission, and is Washington, D.C.
incorporated into this 20549-6009.
prospectus by reference.

SEC File Number: 811-8399

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Prospectus

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April __, 2000
<PAGE>

PIMCO Variable Insurance Trust

Statement of Additional Information

PIMCO Variable Insurance Trust (the "Trust") is an open-end management
investment company ("mutual fund") currently consisting of thirteen separate
investment portfolios (the "Portfolios"): the PIMCO Money Market Portfolio; the
PIMCO Short-Term Bond Portfolio; the PIMCO Low Duration Bond Portfolio; the
PIMCO Real Return Bond Portfolio; the PIMCO High Yield Bond Portfolio; the PIMCO
Total Return Bond Portfolio; the PIMCO Total Return Bond Portfolio II; the PIMCO
Long-Term U.S. Government Bond Portfolio; the PIMCO Global Bond Portfolio; the
PIMCO Foreign Bond Portfolio; the PIMCO Emerging Markets Bond Portfolio
(together, the "Fixed Income Portfolios"); the PIMCO Strategic Balanced
Portfolio; and the PIMCO StocksPLUS Growth and Income Portfolio.

Pacific Investment Management Company ("PIMCO" or the "Adviser"), 840
Newport Center Drive, Suite 300, Newport Beach, California 92660, is investment
adviser to the Portfolios. PIMCO is a subsidiary partnership of PIMCO Advisors
L.P. ("PIMCO Advisors").

Shares of the Portfolios are currently sold to segregated asset accounts
("Separate Accounts") of insurance companies to serve as an investment medium
for variable annuity contracts and variable life insurance policies ("Variable
Contracts"). The Separate Accounts invest in shares of the Portfolios in
accordance with allocation instructions received from owners of the Variable
Contracts ("Variable Contract Owners"). Shares of the Portfolios also may be
sold to qualified pension and retirement plans outside the separate account
context.

This Statement of Additional Information is not a Prospectus, and should be
used in conjunction with a Prospectus for the Trust. The Portfolios' shares are
offered through a Prospectus dated April 1, 2000 (the "Prospectus"). A copy of
the Prospectus may be obtained free of charge at the address and telephone
number listed below.

PIMCO Variable Insurance Trust
840 Newport Center Drive, Suite 300
Newport Beach, California 92660
Telephone: (888) 746-2688

The Trust's most recent Semi-Annual Report to shareholders, and the
financial statements appearing in the Semi-Annual Report, are incorporated by
reference into this Statement of Additional Information. A copy of the Semi-
Annual Report may be obtained free of charge at the address and telephone number
listed above.

April 1, 2000
<PAGE>

TABLE OF CONTENTS
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Page
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DESCRIPTION OF THE TRUST.................................................. 1

INVESTMENT OBJECTIVES AND POLICIES........................................ 1

U.S. Government Securities........................................... 1
Borrowing............................................................ 1
Corporate Debt Securities............................................ 3
Convertible Securities............................................... 4
Participation on Creditors Committees................................ 4
Variable and Floating Rate Securities................................ 5
Inflation-Indexed Bonds.............................................. 5
Mortgage-Related and Other Asset-Backed Securities................... 6
Foreign Securities................................................... 10
Foreign Currency Transactions........................................ 13
Foreign Currency Exchange-Related Securities......................... 14
Bank Obligations..................................................... 15
Loan Participations.................................................. 16
Delayed Funding Loans and Revolving Credit Facilities................ 17
Loans of Portfolio Securities........................................ 18
Short Sales.......................................................... 18
When-Issued, Delayed Delivery, and Forward Commitment Transactions... 19
Derivative Instruments............................................... 19
Warrants to Purchase Securities...................................... 27
Hybrid Instruments................................................... 27
Illiquid Securities.................................................. 28

INVESTMENT RESTRICTIONS................................................... 29

Fundamental Investment Restrictions.................................. 29
Non-Fundamental Investment Restrictions.............................. 30

MANAGEMENT OF THE TRUST................................................... 31

Trustees and Officers................................................ 31
Compensation Table................................................... 34
Investment Adviser................................................... 34
Administrator........................................................ 36

DISTRIBUTION OF TRUST SHARES.............................................. 38

Distributor and Multi-Class Plan..................................... 38
Administrative Services Plan for Administrative Class Shares......... 39
Purchases and Redemptions............................................ 40

PORTFOLIO TRANSACTIONS AND BROKERAGE...................................... 40

Investment Decisions................................................. 40
Brokerage and Research Services...................................... 41
Portfolio Turnover................................................... 42
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<S> <C>
NET ASSET VALUE........................................................... 42

TAXATION.................................................................. 44

Distributions........................................................ 45
Sales of Shares...................................................... 45
Options, Futures and Forward Contracts, and Swap Agreements.......... 46
Passive Foreign Investment Companies................................. 47
Foreign Currency Transactions........................................ 47
Foreign Taxation..................................................... 47
Original Issue Discount.............................................. 48
Other Taxation....................................................... 49

OTHER INFORMATION......................................................... 49

Capitalization....................................................... 49
Performance Information.............................................. 50
Voting Rights........................................................ 57
Year 2000 Readiness Disclosure....................................... 58
Custodian............................................................ 58
Independent Accountants.............................................. 58
Counsel.............................................................. 58
Registration Statement............................................... 59
Financial Statements................................................. 59
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<PAGE>

DESCRIPTION OF THE TRUST

The Trust is a Delaware business trust established under a Trust Instrument
dated October 3, 1997. The Trust is an open-end investment company comprised of
separate portfolios, each of which is treated as a separate portfolio. Each
Portfolio (except the PIMCO Real Return Bond, Global Bond, Foreign Bond, and
Emerging Markets Bond Portfolios) is diversified, which means that, with respect
to 75% of its total assets, the Portfolio will not invest more than 5% of its
assets in the securities of any single issuer.

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives and general investment policies of each Portfolio
are described in the Prospectus. Additional information concerning the
characteristics of certain of the Portfolios' investments is set forth below.

U.S. Government Securities

U.S. Government securities are obligations of and, in certain cases,
guaranteed by, the U.S. Government, its agencies or instrumentalities. The U.S.
Government does not guarantee the net asset value of the Portfolios' shares.
Some U.S. Government securities, such as Treasury bills, notes and bonds, and
securities guaranteed by the Government National Mortgage Association ("GNMA"),
are supported by the full faith and credit of the United States; others, such as
those of the Federal Home Loan Banks, are supported by the right of the issuer
to borrow from the U.S. Treasury; others, such as those of the Federal National
Mortgage Association ("FNMA"), are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; and still others, such
as those of the Student Loan Marketing Association, are supported only by the
credit of the instrumentality. U.S. Government securities may include zero
coupon securities, which do not distribute interest on a current basis and tend
to be subject to greater market risk than interest-paying securities of similar
maturities.

Borrowing

A Portfolio may borrow for temporary administrative purposes. This
borrowing may be unsecured. Provisions of the Investment Company Act of 1940
("1940 Act") require a Portfolio to maintain continuous asset coverage (that is,
total assets including borrowings, less liabilities exclusive of borrowings) of
300% of the amount borrowed, with an exception for borrowings not in excess of
5% of the Portfolio's total assets made for temporary administrative purposes.
Any borrowings for temporary administrative purposes in excess of 5% of the
Portfolio's total assets must maintain continuous asset coverage. If the 300%
asset coverage should decline as a result of market fluctuations or other
reasons, a Portfolio may be required to sell some of its portfolio holdings
within three days to reduce the debt and restore the 300% asset coverage, even
though it may be disadvantageous from an investment standpoint to sell
securities at that time. As noted below, a Portfolio also may enter into
certain transactions, including reverse repurchase agreements, mortgage dollar
rolls, and sale-buybacks, that can be viewed as constituting a form of borrowing
or financing transaction by the Portfolio. To the extent a Portfolio covers its
commitment under a reverse repurchase agreement (or economically similar
transaction) by the segregation of assets determined in accordance with
procedures adopted by the Trustees, equal in value to the amount of the
Portfolio's commitment to repurchase, such an agreement will not be considered a
"senior security" by the Portfolio and therefore will not be subject to the 300%
asset coverage requirement otherwise applicable to borrowings by the Portfolios.
Borrowing will tend to exaggerate the effect on net asset value of any increase
or decrease in the market value of a Portfolio's portfolio. Money borrowed will
be subject to interest costs which may or may not be recovered by appreciation
of the securities purchased. A Portfolio also may be required to maintain
minimum average balances in connection with such borrowing or to pay a
commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.

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<PAGE>

In addition to borrowing for temporary purposes, a Portfolio may enter into
repurchase agreements, reverse repurchase agreements, mortgage dollar rolls,
sale-buybacks, and economically similar transactions. A repurchase agreements,
involves the purchase of a portfolio-eligible security from a bank or broker-
dealer that agrees to repurchase the security at the Portfolio's cost plus
interest within a specified time (normally one day). If the party agreeing to
repurchase should default, as a result of bankruptcy or otherwise, the Portfolio
will seek to sell the securities which it holds, which action could involve
procedural costs or delays in addition to a loss on the securities if their
value should fall below their repurchase price. No Portfolio will invest more
than 15% of its net assets (10% in the case of the PIMCO Money Market Portfolio)
(taken at current market value) in repurchase agreements maturing in more than
seven days.

A reverse repurchase agreement involves the sale of a portfolio-eligible
security by a Portfolio, coupled with its agreement to repurchase the instrument
at a specified time and price. Under a reverse repurchase agreement, the
Portfolio continues to receive any principal and interest payments on the
underlying security during the term of the agreement. The Portfolio typically
will segregate assets determined to be liquid by the Adviser in accordance with
procedures established by the Board of Trustees, equal (on a daily mark-to-
market basis) to its obligations under reverse repurchase agreements. However,
reverse repurchase agreements involve the risk that the market value of
securities retained by the Portfolio may decline below the repurchase price of
the securities sold by the Portfolio which it is obligated to repurchase. To the
extent that positions in reverse repurchase agreements are not covered through
the segregation of liquid assets at least equal to the amount of any forward
purchase commitment, such transactions would be subject to the Funds'
limitations on borrowings, which would restrict the aggregate of such
transactions (plus any other borrowings) to 33 1/3% of a Portfolio's total
assets.

A "mortgage dollar roll" is similar to a reverse repurchase agreement in
certain respects. In a "dollar roll" transaction a Portfolio sells a mortgage-
related security, such as a security issued by the Government National Mortgage
Association ("GNMA"), to a dealer and simultaneously agrees to repurchase a
similar security (but not the same security) in the future at a pre-determined
price. A "dollar roll" can be viewed, like a reverse repurchase agreement, as a
collateralized borrowing in which a Portfolio pledges a mortgage-related
security to a dealer to obtain cash. Unlike in the case of reverse repurchase
agreements, the dealer with which a Portfolio enters into a dollar roll
transaction is not obligated to return the same securities as those originally
sold by the Portfolio, but only securities which are "substantially identical."
To be considered "substantially identical," the securities returned to a
Portfolio generally must: (1) be collateralized by the same types of underlying
mortgages; (2) be issued by the same agency and be part of the same program; (3)
have a similar original stated maturity; (4) have identical net coupon rates;
(5) have similar market yields (and therefore price); and (6) satisfy "good
delivery" requirements, meaning that the aggregate principal amounts of the
securities delivered and received back must be within 2.5% of the initial amount
delivered.

A Portfolio's obligations under a dollar roll agreement must be covered by
segregated liquid assets equal in value to the securities subject to repurchase
by the Portfolio. As with reverse repurchase agreements, to the extent that
positions in dollar roll agreements are not covered by segregated liquid assets
at least equal to the amount of any forward purchase commitment, such
transactions would be subject to the Funds' limitations on borrowings.
Furthermore, because dollar roll transactions may be for terms ranging between
one and six months, dollar roll transactions may be deemed "illiquid" and
subject to a Portfolio's overall limitations on investments in illiquid
securities. A Portfolio also may effect simultaneous purchase and sale
transactions that are known as "sale-buybacks". A sale-buyback is similar to a
reverse repurchase agreement, except that in a sale-buyback, the counterparty
who purchases the security is entitled to receive any principal or interest
payments make on the underlying security pending settlement of the Portfolio's
repurchase of the underlying security. A Portfolio's obligations under a sale-
buyback typically would be offset by liquid assets equal in value to the amount
of the Portfolio's forward commitment to repurchase the subject security.

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Corporate Debt Securities

A Portfolio's investments in U.S. dollar or foreign currency-denominated
corporate debt securities of domestic or foreign issuers are limited to
corporate debt securities (corporate bonds, debentures, notes and other similar
corporate debt instruments, including convertible securities) which meet the
minimum ratings criteria set forth for the Portfolio, or, if unrated, are in the
Adviser's opinion comparable in quality to corporate debt securities in which
the Portfolio may invest. Corporate income-producing securities may include
forms of preferred or preference stock. The rate of interest on a corporate
debt security may be fixed, floating or variable, and may vary inversely with
respect to a reference rate. The rate of return or return of principal on some
debt obligations may be linked or indexed to the level of exchange rates between
the U.S. dollar and a foreign currency or currencies. Debt securities may be
acquired with warrants attached.

Securities rated Baa and BBB are the lowest which are considered
"investment grade" obligations. Moody's Investor Service, Inc. ("Moody's")
describes securities rated Baa as "medium-grade" obligations; they are "neither
highly protected nor poorly secured . . . [i]nterest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well." Standard & Poor's Ratings Services ("S&P")
describes securities rated BBB as "regarded as having an adequate capacity to
pay interest and repay principal . . . [w]hereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal .
. . than in higher rated categories." For a discussion of securities rated
below investment grade, see "High Yield Securities ("Junk Bonds")" below.

High Yield Securities ("Junk Bonds")

Investments in securities rated below investment grade that are eligible
for purchase by certain of the Portfolios (i.e., rated B or better by Moody's or
S&P), and in particular, by the PIMCO High Yield Bond Portfolio, are described
as "speculative" by both Moody's and S&P. Investment in lower rated corporate
debt securities ("high yield securities" or "junk bonds") generally provides
greater income and increased opportunity for capital appreciation than
investments in higher quality securities, but they also typically entail greater
price volatility and principal and income risk. These high yield securities are
regarded as predominantly speculative with respect to the issuer's continuing
ability to meet principal and interest payments. Analysis of the
creditworthiness of issuers of debt securities that are high yield may be more
complex than for issuers of higher quality debt securities.

High yield securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade securities.
The prices of high yield securities have been found to be less sensitive to
interest-rate changes than higher-rated investments, but more sensitive to
adverse economic downturns or individual corporate developments. A projection
of an economic downturn or of a period of rising interest rates, for example,
could cause a decline in high yield security prices because the advent of a
recession could lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. If an issuer of high
yield securities defaults, in addition to risking payment of all or a portion of
interest and principal, the Portfolios investing in such securities may incur
additional expenses to seek recovery. In the case of high yield securities
structured as zero-coupon or pay-in-kind securities, their market prices are
affected to a greater extent by interest rate changes, and therefore tend to be
more volatile than securities which pay interest periodically and in cash. The
Adviser seeks to reduce these risks through diversification, credit analysis and
attention to current developments and trends in both the economy and financial
markets.

The secondary market on which high yield securities are traded may be less
liquid than the market for higher grade securities. Less liquidity in the
secondary trading market could adversely affect the price at which the
Portfolios could sell a high yield security, and could adversely affect the
daily net

3
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asset value of the shares. Adverse publicity and investor perceptions, whether
or not based on fundamental analysis, may decrease the values and liquidity of
high yield securities, especially in a thinly-traded market. When secondary
markets for high yield securities are less liquid than the market for higher
grade securities, it may be more difficult to value the securities because such
valuation may require more research, and elements of judgment may play a greater
role in the valuation because there is less reliable, objective data available.
The Adviser seeks to minimize the risks of investing in all securities through
diversification, in-depth credit analysis and attention to current developments
in interest rates and market conditions.

The use of credit ratings as the sole method of evaluating high yield
securities can involve certain risks. For example, credit ratings evaluate the
safety of principal and interest payments, not the market value risk of high
yield securities. Also, credit rating agencies may fail to change credit
ratings in a timely fashion to reflect events since the security was last rated.
The Adviser does not rely solely on credit ratings when selecting securities for
the Portfolio, and develops its own independent analysis of issuer credit
quality. If a credit rating agency changes the rating of a portfolio security
held by a Portfolio, the Portfolio may retain the portfolio security if the
Adviser deems it in the best interest of shareholders.

Convertible Securities

Each Portfolio may invest in convertible securities, which may offer higher
income than the common stocks into which they are convertible.

A convertible debt security is a bond, debenture, note, or other security
that entitles the holder to acquire common stock or other equity securities of
the same or a different issuer. A convertible security generally entitles the
holder to receive interest paid or accrued until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to non-convertible debt securities.
Convertible securities rank senior to common stock in a corporation's capital
structure and, therefore, generally entail less risk than the corporation's
common stock, although the extent to which such risk is reduced depends in large
measure upon the degree to which the convertible security sells above its value
as a fixed income security.

Because of the conversion feature, the price of the convertible security
will normally fluctuate in some proportion to changes in the price of the
underlying asset, and as such is subject to risks relating to the activities of
the issuer and/or general market and economic conditions. The income component
of a convertible security may tend to cushion the security against declines in
the price of the underlying asset. However, the income component of convertible
securities causes fluctuations based upon changes in interest rates and the
credit quality of the issuer. In addition, convertible securities are often
lower-rated securities.

A convertible security may be subject to redemption at the option of the
issuer at a predetermined price. If a convertible security held by a Portfolio
is called for redemption, the Portfolio would be required to permit the issuer
to redeem the security and convert it to underlying common stock, or would sell
the convertible security to a third party, which may have an adverse effect on
the Portfolio's ability to achieve its investment objective. A Portfolio
generally would invest in convertible securities for their favorable price
characteristics and total return potential and would normally not exercise an
option to convert.

Participation on Creditors Committees

A Portfolio (in particular, the PIMCO High Yield Bond Portfolio) may from
time to time participate on committees formed by creditors to negotiate with the
management of financially troubled issuers of securities held by the Portfolio.
Such participation may subject a Portfolio to expenses such as legal fees and
may make a Portfolio an "insider" of the issuer for purposes of the federal
securities laws, and therefore may restrict such Portfolio's ability to trade in
or acquire additional positions in a particular security when it might otherwise
desire to do so. Participation by a Portfolio on such committees also

4
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may expose the Portfolio to potential liabilities under the federal bankruptcy
laws or other laws governing the rights of creditors and debtors. A Portfolio
will participate on such committees only when the Adviser believes that such
participation is necessary or desirable to enforce the Portfolio's rights as a
creditor or to protect the value of securities held by the Portfolio.

Variable and Floating Rate Securities

Variable and floating rate securities provide for a periodic adjustment in
the interest rate paid on the obligations. The terms of such obligations must
provide that interest rates are adjusted periodically based upon an interest
rate adjustment index as provided in the respective obligations. The adjustment
intervals may be regular, and range from daily up to annually, or may be event
based, such as based on a change in the prime rate. The PIMCO Money Market
Portfolio may invest in a variable rate security having a stated maturity in
excess of 397 calendar days if the interest rate will be adjusted and the
Portfolio may demand payment of principal from the issuer within that period.

Each of the Fixed Income Portfolios may engage in floating rate debt
instruments ("floaters") and (except for the PIMCO Money Market Portfolio)
credit spread trades. The interest rate on a floater is a variable rate which
is tied to another interest rate, such as a money-market index or Treasury bill
rate. The interest rate on a floater resets periodically, typically every six
months. While, because of the interest rate reset feature, floaters provide a
Portfolio with a certain degree of protection against rises in interest rates, a
Portfolio will participate in any declines in interest rates as well. A credit
spread trade is an investment position relating to a difference in the prices or
interest rates of two securities or currencies, where the value of the
investment position is determined by movements in the difference between the
prices or interest rates, as the case may be, of the respective securities or
currencies.

Each of the Fixed Income Portfolios may also invest in inverse floating
rate debt instruments ("inverse floaters"). The interest rate on an inverse
floater resets in the opposite direction from the market rate of interest to
which the inverse floater is indexed. An inverse floating rate security may
exhibit greater price volatility than a fixed rate obligation of similar credit
quality. The Portfolios have adopted a policy under which no Portfolio will
invest more than 5% of its net assets in any combination of inverse floater,
interest only ("IO"), or principal only ("PO") securities. See "Mortgage-Related
and Other Asset-Backed Securities" for a discussion of IOs and POs.

Inflation-Indexed Bonds

Inflation-indexed bonds are fixed income securities whose principal value
is periodically adjusted according to the rate of inflation. Two structures are
common. The U.S. Treasury and some other issuers use a structure that accrues
inflation into the principal value of the bond. Most other issuers pay out the
CPI accruals as part of a semiannual coupon.

Inflation-indexed securities issued by the U.S. Treasury have maturities of
five, ten or thirty years, although it is possible that securities with other
maturities will be issued in the future. The U.S. Treasury securities pay
interest on a semi-annual basis, equal to a fixed percentage of the inflation-
adjusted principal amount. For example, if a Portfolio purchased an inflation-
indexed bond with a par value of $1,000 and a 3% real rate of return coupon
(payable 1.5% semi-annually), and inflation over the first six months were 1%,
the mid-year par value of the bond would be $1,010 and the first semi-annual
interest payment would be $15.15 ($1,010 times 1.5%). If inflation during the
second half of the year resulted in the whole years' inflation equaling 3%, the
end-of-year par value of the bond would be $1,030 and the second semi- annual
interest payment would be $15.45 ($1,030 times 1.5%).

If the periodic adjustment rate measuring inflation falls, the principal
value of inflation-indexed bonds will be adjusted downward, and consequently the
interest payable on these securities (calculated with respect to a smaller
principal amount) will be reduced. Repayment of the original bond principal upon
maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury
inflation-indexed

5
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bonds, even during a period of deflation. However, the current market value of
the bonds is not guaranteed, and will fluctuate. The Portfolios may also invest
in other inflation related bonds which may or may not provide a similar
guarantee. If a guarantee of principal is not provided, the adjusted principal
value of the bond repaid at maturity may be less than the original principal.

The value of inflation-indexed bonds is expected to change in response to
changes in real interest rates. Real interest rates in turn are tied to the
relationship between nominal interest rates and the rate of inflation.
Therefore, if inflation were to rise at a faster rate than nominal interest
rates, real interest rates might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increased at a
faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds.

While these securities are expected to be protected from long-term
inflationary trends, short-term increases in inflation may lead to a decline in
value. If interest rates rise due to reasons other than inflation (for example,
due to changes in currency exchange rates), investors in these securities may
not be protected to the extent that the increase is not reflected in the bond's
inflation measure.

The periodic adjustment of U.S. inflation-indexed bonds is tied to the
Consumer Price Index for Urban Consumers ("CPI-U"), which is calculated monthly
by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in
the cost of living, made up of components such as housing, food, transportation
and energy. Inflation-indexed bonds issued by a foreign government are generally
adjusted to reflect a comparable inflation index, calculated by that government.
There can be no assurance that the CPI-U or any foreign inflation index will
accurately measure the real rate of inflation in the prices of goods and
services. Moreover, there can be no assurance that the rate of inflation in a
foreign country will be correlated to the rate of inflation in the United
States.

Any increase in the principal amount of an inflation-indexed bond will be
considered taxable ordinary income, even though investors do not receive their
principal until maturity.

Mortgage-Related and Other Asset-Backed Securities

Mortgage-related securities are interests in pools of residential or
commercial mortgage loans, including mortgage loans made by savings and loan
institutions, mortgage bankers, commercial banks and others. Pools of mortgage
loans are assembled as securities for sale to investors by various governmental,
government-related and private organizations. See "Mortgage Pass-Through
Securities." The Portfolios may also invest in debt securities which are
secured with collateral consisting of mortgage-related securities (see
"Collateralized Mortgage Obligations"), and in other types of mortgage-related
securities.

Mortgage Pass-Through Securities. Interests in pools of mortgage-related
securities differ from other forms of debt securities, which normally provide
for periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates. Instead, these securities provide a monthly
payment which consists of both interest and principal payments. In effect,
these payments are a "pass-through" of the monthly payments made by the
individual borrowers on their residential or commercial mortgage loans, net of
any fees paid to the issuer or guarantor of such securities. Additional
payments are caused by repayments of principal resulting from the sale of the
underlying property, refinancing or foreclosure, net of fees or costs which may
be incurred. Some mortgage-related securities (such as securities issued by
GNMA) are described as "modified pass-through." These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, at the scheduled payment dates regardless of whether or not
the mortgagor actually makes the payment.

The rate of prepayments on underlying mortgages will affect the price and
volatility of a mortgage-related security, and may have the effect of shortening
or extending the effective maturity of the security beyond what was anticipated
at the time of purchase. To the extent that unanticipated rates of

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prepayment on underlying mortgages increase the effective maturity of a
mortgage-related security, the volatility of such security can be expected to
increase.

The principal governmental guarantor of mortgage-related securities is
GNMA. GNMA is a wholly owned United States Government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the United States Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of mortgages insured by the Federal Housing
Administration (the "FHA"), or guaranteed by the Department of Veterans Affairs
(the "VA").

Government-related guarantors (i.e., not backed by the full faith and
credit of the United States Government) include the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").
FNMA is a government-sponsored corporation owned entirely by private
stockholders. It is subject to general regulation by the Secretary of Housing
and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any government agency) residential mortgages from a list of
approved seller/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. Pass-through securities issued by FNMA are guaranteed as
to timely payment of principal and interest by FNMA but are not backed by the
full faith and credit of the United States Government. FHLMC was created by
Congress in 1970 for the purpose of increasing the availability of mortgage
credit for residential housing. It is a government-sponsored corporation
formerly owned by the twelve Federal Home Loan Banks and now owned entirely by
private stockholders. FHLMC issues Participation Certificates ("PCs") which
represent interests in conventional mortgages from FHLMC's national portfolio.
FHLMC guarantees the timely payment of interest and ultimate collection of
principal, but PCs are not backed by the full faith and credit of the United
States Government.

Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create pass-
through pools of conventional residential mortgage loans. Such issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. Pools created by
such non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments in the former pools. However, timely
payment of interest and principal of these pools may be supported by various
forms of insurance or guarantees, including individual loan, title, pool and
hazard insurance and letters of credit. The insurance and guarantees are issued
by governmental entities, private insurers and the mortgage poolers. Such
insurance and guarantees and the creditworthiness of the issuers thereof will be
considered in determining whether a mortgage-related security meets the Trust's
investment quality standards. There can be no assurance that the private
insurers or guarantors can meet their obligations under the insurance policies
or guarantee arrangements. The Portfolios may buy mortgage-related securities
without insurance or guarantees if, through an examination of the loan
experience and practices of the originator/servicers and poolers, the Adviser
determines that the securities meet the Trust's quality standards. Although the
market for such securities is becoming increasingly liquid, securities issued by
certain private organizations may not be readily marketable. No Portfolio will
purchase mortgage-related securities or any other assets which in the Adviser's
opinion are illiquid if, as a result, more than 15% of the value of the
Portfolio's net assets will be illiquid (10% in the case of the PIMCO Money
Market Portfolio.)

Mortgage-backed securities that are issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, are not subject to the
Portfolios' industry concentration restrictions, set forth below under
"Investment Restrictions," by virtue of the exclusion from that test available
to all U.S. Government securities. In the case of privately issued mortgage-
related securities, the Portfolios take the position that mortgage-related
securities do not represent interests in any particular "industry" or group of
industries. The assets underlying such securities may be represented by a
portfolio of first lien residential

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mortgages (including both whole mortgage loans and mortgage participation
interests) or portfolios of mortgage pass-through securities issued or
guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related
security may in turn be insured or guaranteed by the FHA or the VA. In the case
of private issue mortgage-related securities whose underlying assets are neither
U.S. Government securities nor U.S. Government-insured mortgages, to the extent
that real properties securing such assets may be located in the same
geographical region, the security may be subject to a greater risk of default
than other comparable securities in the event of adverse economic, political or
business developments that may affect such region and, ultimately, the ability
of residential homeowners to make payments of principal and interest on the
underlying mortgages.

Collateralized Mortgage Obligations (CMOs). A CMO is a hybrid between a
mortgage-backed bond and a mortgage pass-through security. Interest and prepaid
principal on a CMO is paid, in most cases, monthly. CMOs may be collateralized
by whole mortgage loans, but are more typically collateralized by portfolios of
mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their
income streams.

CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding
the longer maturity classes receive principal only after the first class has
been retired. An investor is partially guarded against a sooner than desired
return of principal because of the sequential payments.

In a typical CMO transaction, a corporation ("issuer") issues multiple
series (e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering
are used to purchase mortgages or mortgage pass-through certificates
("Collateral"). The Collateral is pledged to a third party trustee as security
for the Bonds. Principal and interest payments from the Collateral are used to
pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C
Bonds all bear current interest. Interest on the Series Z Bond is accrued and
added to principal and a like amount is paid as principal on the Series A, B, or
C Bond currently being paid off. When the Series A, B, and C Bonds are paid in
full, interest and principal on the Series Z Bond begins to be paid currently.
With some CMOs, the issuer serves as a conduit to allow loan originators
(primarily builders or savings and loan associations) to borrow against their
loan portfolios.

FHLMC Collateralized Mortgage Obligations. FHLMC CMOs are debt obligations
of FHLMC issued in multiple classes having different maturity dates which are
secured by the pledge of a pool of conventional mortgage loans purchased by
FHLMC. Unlike FHLMC PCs, payments of principal and interest on the CMOs are
made semi-annually, as opposed to monthly. The amount of principal payable on
each semiannual payment date is determined in accordance with FHLMC's mandatory
sinking fund schedule, which, in turn, is equal to approximately 100% of FHA
prepayment experience applied to the mortgage collateral pool. All sinking fund
payments in the CMOs are allocated to the retirement of the individual classes
of bonds in the order of their stated maturities. Payment of principal on the
mortgage loans in the collateral pool in excess of the amount of FHLMC's minimum
sinking fund obligation for any payment date are paid to the holders of the CMOs
as additional sinking fund payments. Because of the "pass-through" nature of
all principal payments received on the collateral pool in excess of FHLMC's
minimum sinking fund requirement, the rate at which principal of the CMOs is
actually repaid is likely to be such that each class of bonds will be retired in
advance of its scheduled maturity date.

If collection of principal (including prepayments) on the mortgage loans
during any semi-annual payment period is not sufficient to meet FHLMC's minimum
sinking fund obligation on the next sinking fund payment date, FHLMC agrees to
make up the deficiency from its general funds.

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Criteria for the mortgage loans in the pool backing the FHLMC CMOs are
identical to those of FHLMC PCs. FHLMC has the right to substitute collateral
in the event of delinquencies and/or defaults.

Commercial Mortgage-Backed Securities include securities that reflect an
interest in, and are secured by, mortgage loans on commercial real property.
The market for commercial mortgage-backed securities developed more recently and
in terms of total outstanding principal amount of issues is relatively small
compared to the market for residential single-family mortgage-backed securities.
Many of the risks of investing in commercial mortgage-backed securities reflect
the risks of investing in the real estate securing the underlying mortgage
loans. These risks reflect the effects of local and other economic conditions on
real estate markets, the ability of tenants to make loan payments, and the
ability of a property to attract and retain tenants. Commercial mortgage-backed
securities may be less liquid and exhibit greater price volatility than other
types of mortgage- or asset-backed securities.

Other Mortgage-Related Securities. Other mortgage-related securities
include securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
on real property, including mortgage dollar rolls, CMO residuals or stripped
mortgage-backed securities ("SMBS"). Other mortgage-related securities may be
equity or debt securities issued by agencies or instrumentalities of the U.S.
Government or by private originators of, or investors in, mortgage loans,
including savings and loan associations, homebuilders, mortgage banks,
commercial banks, investment banks, partnerships, trusts and special purpose
entities of the foregoing.

CMO Residuals. CMO residuals are mortgage securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations,
homebuilders, mortgage banks, commercial banks, investment banks and special
purpose entities of the foregoing.

The cash flow generated by the mortgage assets underlying a series of CMOs
is applied first to make required payments of principal and interest on the CMOs
and second to pay the related administrative expenses of the issuer. The
residual in a CMO structure generally represents the interest in any excess cash
flow remaining after making the foregoing payments. Each payment of such excess
cash flow to a holder of the related CMO residual represents income and/or a
return of capital. The amount of residual cash flow resulting from a CMO will
depend on, among other things, the characteristics of the mortgage assets, the
coupon rate of each class of CMO, prevailing interest rates, the amount of
administrative expenses and the prepayment experience on the mortgage assets.
In particular, the yield to maturity on CMO residuals is extremely sensitive to
prepayments on the related underlying mortgage assets, in the same manner as an
interest-only ("IO") class of stripped mortgage-backed securities. See "Other
Mortgage-Related Securities--Stripped Mortgage-Backed Securities." In addition,
if a series of a CMO includes a class that bears interest at an adjustable rate,
the yield to maturity on the related CMO residual will also be extremely
sensitive to changes in the level of the index upon which interest rate
adjustments are based. As described below with respect to stripped mortgage-
backed securities, in certain circumstances a Portfolio may fail to recoup fully
its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers. The CMO
residual market has only very recently developed and CMO residuals currently may
not have the liquidity of other more established securities trading in other
markets. Transactions in CMO residuals are generally completed only after
careful review of the characteristics of the securities in question. In
addition, CMO residuals may, or pursuant to an exemption therefrom, may not have
been registered under the Securities Act of 1933, as amended (the "1933 Act").
CMO residuals, whether or not registered under the 1933 Act, may be subject to
certain restrictions on transferability, and may be deemed "illiquid" and
subject to a Portfolio's limitations on investment in illiquid securities.

Stripped Mortgage-Backed Securities. SMBS are derivative multi-class
mortgage securities. SMBS may be issued by agencies or instrumentalities of the
U.S. Government, or by private originators

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of, or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose entities
of the foregoing.

SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions on a pool of mortgage
assets. A common type of SMBS will have one class receiving some of the
interest and most of the principal from the mortgage assets, while the other
class will receive most of the interest and the remainder of the principal. In
the most extreme case, one class will receive all of the interest (the "IO"
class), while the other class will receive all of the principal (the principal-
only or "PO" class). The yield to maturity on an IO class is extremely
sensitive to the rate of principal payments (including prepayments) on the
related underlying mortgage assets, and a rapid rate of principal payments may
have a material adverse effect on a Portfolio's yield to maturity from these
securities. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, a Portfolio may fail to recoup some or all
of its initial investment in these securities even if the security is in one of
the highest rating categories. The Portfolios have adopted a policy under which
no Portfolio will invest more than 5% of its net assets in any combination of
IO, PO, or inverse floater securities.

Although SMBS are purchased and sold by institutional investors through
several investment banking firms acting as brokers or dealers, these securities
were only recently developed. As a result, established trading markets have not
yet developed and, accordingly, these securities may be deemed "illiquid" and
subject to a Portfolio's limitations on investment in illiquid securities.

Other Asset-Backed Securities. Similarly, the Adviser expects that other
asset-backed securities (unrelated to mortgage loans) will be offered to
investors in the future. Several types of asset-backed securities have already
been offered to investors, including Certificates for Automobile Receivables(SM)
("CARS(SM)"). CARS(SM) represent undivided fractional interests in a trust whose
assets consist of a pool of motor vehicle retail installment sales contracts and
security interests in the vehicles securing the contracts. Payments of principal
and interest on CARS(SM) are passed through monthly to certificate holders, and
are guaranteed up to certain amounts and for a certain time period by a letter
of credit issued by a financial institution unaffiliated with the trustee or
originator of the trust. An investor's return on CARS(SM) may be affected by
early prepayment of principal on the underlying vehicle sales contracts. If the
letter of credit is exhausted, the trust may be prevented from realizing the
full amount due on a sales contract because of state law requirements and
restrictions relating to foreclosure sales of vehicles and the obtaining of
deficiency judgments following such sales or because of depreciation, damage or
loss of a vehicle, the application of federal and state bankruptcy and
insolvency laws, or other factors. As a result, certificate holders may
experience delays in payments or losses if the letter of credit is exhausted.

Consistent with a Portfolio's investment objectives and policies, the
Adviser also may invest in other types of asset-backed securities.

Foreign Securities

The Fixed Income Portfolios (except the PIMCO Total Return Bond II and
Long-Term U.S. Government Portfolios) and the PIMCO Strategic Balanced and
StocksPLUS Growth and Income Portfolios may invest in corporate debt securities
of foreign issuers (including preferred or preference stock), certain foreign
bank obligations (see "Bank Obligations") and U.S. dollar- or foreign currency-
denominated obligations of foreign governments or their subdivisions, agencies
and instrumentalities, international agencies and supranational entities. The
PIMCO Money Market and High Yield Bond Portfolios may invest in securities of
foreign issuers only if they are U.S. dollar-denominated.

Except for the PIMCO Emerging Markets Bond Portfolio, each of the
Portfolios will concentrate its investments in securities of issuers based in
developed countries. However, the PIMCO Short-Term Bond and Low Duration Bond
Portfolios may each invest up to 5% of its assets in securities of issuers based
in the emerging market countries in which the PIMCO Emerging Markets Bond
Portfolio may

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invest, and each of the remaining Fixed Income Portfolios that may invest in
foreign securities may invest up to 10% of its assets in such securities.

Securities traded in certain emerging market countries, including the
emerging market countries in Eastern Europe, may be subject to risks in addition
to risks typically posed by international investing due to the inexperience of
financial intermediaries, the lack of modern technology, and the lack of a
sufficient capital base to expand business operations. A number of emerging
market countries restrict, to varying degrees, foreign investment in securities.
Repatriation of investment income, capital, and the proceeds of sales by foreign
investors may require governmental registration and/or approval in some emerging
market countries. A number of the currencies of emerging market countries have
experienced significant declines against the U.S. dollar in recent years, and
devaluation may occur after investments in these currencies by a Portfolio.
Inflation and rapid fluctuations in inflation rates have had, and may continue
to have, negative effects on the economies and securities markets of certain
emerging market countries. Many of the emerging securities markets are
relatively small, have low trading volumes, suffer periods of relative
illiquidity, and are characterized by significant price volatility. There is a
risk in emerging market countries that a future economic or political crisis
could lead to price controls, forced mergers of companies, expropriation or
confiscatory taxation, seizure, nationalization, or creation of government
monopolies, any of which may have a detrimental effect on a Portfolio's
investment.

Additional risks of investing in emerging market countries may include:
currency exchange rate fluctuations; greater social, economic and political
uncertainty and instability (including the risk of war); more substantial
governmental involvement in the economy; less governmental supervision and
regulation of the securities markets and participants in those markets;
unavailability of currency hedging techniques in certain emerging market
countries; the fact that companies in emerging market countries may be newly
organized and may be smaller and less seasoned companies; the difference in, or
lack of, auditing and financial reporting standards, which may result in
unavailability of material information about issuers; the risk that it may be
more difficult to obtain and/or enforce a judgment in a court outside the United
States; and significantly smaller market capitalization of securities markets.
Emerging securities markets may have different clearance and settlement
procedures, which may be unable to keep pace with the volume of securities
transactions or otherwise make it difficult to engage in such transactions.
Settlement problems may cause a Portfolio to miss attractive investment
opportunities, hold a portion of its assets in cash pending investment, or delay
in disposing of a portfolio security. Such a delay could result in possible
liability to a purchaser of the security. Any change in the leadership or
policies of Eastern European countries, or the countries that exercise a
significant influence over those countries, may halt the expansion of or reverse
the liberalization of foreign investment policies now occurring and adversely
affect existing investment opportunities. Additionally, former Communist
regimes of a number of Eastern European countries previously expropriated a
large amount of property, the claims on which have not been entirely settled.
There can be no assurance that a Portfolio's investments in Eastern Europe will
not also be expropriated, nationalized or otherwise confiscated.

Each of the Fixed Income Portfolios (except the PIMCO Total Return Bond II
and Long-Term U.S. Government Portfolios) may invest in Brady Bonds. Brady
Bonds are securities created through the exchange of existing commercial bank
loans to sovereign entities for new obligations in connection with debt
restructurings under a debt restructuring plan introduced by former U.S.
Secretary of the Treasury, Nicholas F. Brady (the "Brady Plan"). Brady Plan
debt restructurings have been implemented in a number of countries, including:
Argentina, Bolivia, Bulgaria, Costa Rica, the Dominican Republic, Ecuador,
Jordan, Mexico, Niger, Nigeria, the Philippines, Poland, Uruguay, and Venezuela.
In addition, Brazil has concluded a Brady-like plan. It is expected that other
countries will undertake a Brady Plan in the future, including Panama and Peru.

Brady Bonds have only been issued recently, and accordingly do not have a
long payment history. Brady Bonds may be collateralized or uncollateralized, are
issued in various currencies (primarily the U.S. dollar) and are actively traded
in the over-the-counter secondary market. Brady Bonds are not

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considered to be U.S. Government securities. U.S. dollar-denominated,
collateralized Brady Bonds, which may be fixed rate par bonds or floating rate
discount bonds, are generally collateralized in full as to principal by U.S.
Treasury zero coupon bonds having the same maturity as the Brady Bonds. Interest
payments on these Brady Bonds generally are collateralized on a one-year or
longer rolling-forward basis by cash or securities in an amount that, in the
case of fixed rate bonds, is equal to at least one year of interest payments or,
in the case of floating rate bonds, initially is equal to at least one year's
interest payments based on the applicable interest rate at that time and is
adjusted at regular intervals thereafter. Certain Brady Bonds are entitled to
"value recovery payments" in certain circumstances, which in effect constitute
supplemental interest payments but generally are not collateralized. Brady Bonds
are often viewed as having three or four valuation components: (i) the
collateralized repayment of principal at final maturity; (ii) the collateralized
interest payments; (iii) the uncollateralized interest payments; and (iv) any
uncollateralized repayment of principal at maturity (these uncollateralized
amounts constitute the "residual risk").

Most Mexican Brady Bonds issued to date have principal repayments at final
maturity fully collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and interest coupon payments
collateralized on an 18-month rolling-forward basis by funds held in escrow by
an agent for the bondholders. A significant portion of the Venezuelan Brady
Bonds and the Argentine Brady Bonds issued to date have principal repayments at
final maturity collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and/or interest coupon payments
collateralized on a 14-month (for Venezuela) or 12-month (for Argentina)
rolling-forward basis by securities held by the Federal Reserve Bank of New York
as collateral agent.

Brady Bonds involve various risk factors, including residual risk and the
history of defaults with respect to commercial bank loans by public and private
entities in countries issuing Brady Bonds. There can be no assurance that Brady
Bonds in which the Portfolios may invest will not be subject to restructuring
arrangements or to requests for new credit, which may cause the Portfolios to
suffer a loss of interest or principal on any of its holdings.

Investment in sovereign debt can involve a high degree of risk. The
governmental entity that controls the repayment of sovereign debt may not be
able or willing to repay the principal and/or interest when due in accordance
with the terms of the debt. A governmental entity's willingness or ability to
repay principal and interest due in a timely manner may be affected by, among
other factors, its cash flow situation, the extent of its foreign reserves, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the
governmental entity's policy toward the International Monetary Portfolio, and
the political constraints to which a governmental entity may be subject.
Governmental entities may also depend on expected disbursements from foreign
governments, multilateral agencies and others to reduce principal and interest
arrearages on their debt. The commitment on the part of these governments,
agencies and others to make such disbursements may be conditioned on a
governmental entity's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties' commitments to lend funds to the governmental entity, which may further
impair such debtor's ability or willingness to service its debts in a timely
manner. Consequently, governmental entities may default on their sovereign
debt. Holders of sovereign debt (including the Portfolios) may be requested to
participate in the rescheduling of such debt and to extend further loans to
governmental entities. There is no bankruptcy proceeding by which sovereign
debt on which governmental entities have defaulted may be collected in whole or
in part.

A Portfolio's investments in foreign currency denominated debt obligations
and hedging activities will likely produce a difference between its book income
and its taxable income. This difference may cause a portion of the Portfolio's
income distributions to constitute returns of capital for tax purposes or
require the Portfolio to make distributions exceeding book income to qualify as
a regulated investment company for federal tax purposes.

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The PIMCO Emerging Markets Bond Portfolio will consider an issuer to be
economically tied to a country with an emerging securities market if (1) the
issuer is organized under the laws of, or maintains its principal place of
business in, the country, (2) its securities are principally traded in the
country's securities markets, or (3) the issuer derived at least half of its
revenues or profits from goods produced or sold, investments made, or services
performed in the country, or has at least half of its assets in that country.

Foreign Currency Transactions

All Portfolios that may invest in foreign currency-denominated securities
also may purchase and sell foreign currency options and foreign currency futures
contracts and related options (see "Derivative Instruments"), and may engage in
foreign currency transactions either on a spot (cash) basis at the rate
prevailing in the currency exchange market at the time or through forward
currency contracts ("forwards") with terms generally of less than one year.
Portfolios may engage in these transactions in order to protect against
uncertainty in the level of future foreign exchange rates in the purchase and
sale of securities. The Portfolios may also use foreign currency options and
foreign currency forward contracts to increase exposure to a foreign currency or
to shift exposure to foreign currency fluctuations from one country to another.

A forward involves an obligation to purchase or sell a specific currency at
a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts may be bought or sold to protect a Portfolio against a possible
loss resulting from an adverse change in the relationship between foreign
currencies and the U.S. dollar or to increase exposure to a particular foreign
currency. A Portfolio may use one currency (or a basket of currencies) to hedge
against adverse changes in the value of another currency (or a basket of
currencies) when exchange rates between the two currencies are positively
correlated. Open positions in forwards used for non-hedging purposes will be
covered by the segregation with the Trust's custodian of assets determined to be
liquid by the Adviser in accordance with procedures established by the Board of
Trustees, and are marked to market daily. Although forwards are intended to
minimize the risk of loss due to a decline in the value of the hedged
currencies, at the same time, they tend to limit any potential gain which might
result should the value of such currencies increase. Forwards will be used
primarily to adjust the foreign exchange exposure of each Portfolio with a view
to protecting the outlook, and the Portfolios might be expected to enter into
such contracts under the following circumstances:

Lock In. When the Adviser desires to lock in the U.S. dollar price on the
purchase or sale of a security denominated in a foreign currency.

Cross Hedge. If a particular currency is expected to decrease against
another currency, a Portfolio may sell the currency expected to decrease and
purchase a currency which is expected to increase against the currency sold in
an amount approximately equal to some or all of the Portfolio's portfolio
holdings denominated in the currency sold.

Direct Hedge. If the Adviser wants to a eliminate substantially all of the
risk of owning a particular currency, and/or if the Adviser thinks that a
Portfolio can benefit from price appreciation in a given country's bonds but
does not want to hold the currency, it may employ a direct hedge back into the
U.S. dollar. In either case, a Portfolio would enter into a forward contract to
sell the currency in which a portfolio security is denominated and purchase U.S.
dollars at an exchange rate established at the time it initiated the contract.
The cost of the direct hedge transaction may offset most, if not all, of the
yield advantage offered by the foreign security, but a Portfolio would hope to
benefit from an increase (if any) in value of the bond.

Proxy Hedge. The Adviser might choose to use a proxy hedge, which may be
less costly than a direct hedge. In this case, a Portfolio, having purchased a
security, will sell a currency whose value is

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believed to be closely linked to the currency in which the security is
denominated. Interest rates prevailing in the country whose currency was sold
would be expected to be closer to those in the U.S. and lower than those of
securities denominated in the currency of the original holding. This type of
hedging entails greater risk than a direct hedge because it is dependent on a
stable relationship between the two currencies paired as proxies and the
relationships can be very unstable at times.

Costs of Hedging. When a Portfolio purchases a foreign bond with a higher
interest rate than is available on U.S. bonds of a similar maturity, the
additional yield on the foreign bond could be substantially reduced or lost if
the Portfolio were to enter into a direct hedge by selling the foreign currency
and purchasing the U.S. dollar. This is what is known as the "cost" of hedging.
Proxy hedging attempts to reduce this cost through an indirect hedge back to the
U.S. dollar.

It is important to note that hedging costs are treated as capital
transactions and are not, therefore, deducted from a Portfolio's dividend
distribution and are not reflected in its yield. Instead such costs will, over
time, be reflected in a Portfolio's net asset value per share.

Tax Consequences of Hedging. Under applicable tax law, the Portfolios may
be required to limit their gains from hedging in foreign currency forwards,
futures, and options. Although the Portfolios are expected to comply with such
limits, the extent to which these limits apply is subject to tax regulations as
yet unissued. Hedging may also result in the application of the marked-to-
market and straddle provisions of the Internal Revenue Code. Those provisions
could result in an increase (or decrease) in the amount of taxable dividends
paid by the Portfolios and could affect whether dividends paid by the Portfolios
are classified as capital gains or ordinary income.

Foreign Currency Exchange-Related Securities

Foreign currency warrants. Foreign currency warrants such as Currency
Exchange Warrants(SM) ("CEWs(SM)") are warrants which entitle the holder to
receive from their issuer an amount of cash (generally, for warrants issued in
the United States, in U.S. dollars) which is calculated pursuant to a
predetermined formula and based on the exchange rate between a specified foreign
currency and the U.S. dollar as of the exercise date of the warrant. Foreign
currency warrants generally are exercisable upon their issuance and expire as of
a specified date and time. Foreign currency warrants have been issued in
connection with U.S. dollar-denominated debt offerings by major corporate
issuers in an attempt to reduce the foreign currency exchange risk which, from
the point of view of prospective purchasers of the securities, is inherent in
the international fixed-income marketplace. Foreign currency warrants may
attempt to reduce the foreign exchange risk assumed by purchasers of a security
by, for example, providing for a supplemental payment in the event that the U.S.
dollar depreciates against the value of a major foreign currency such as the
Japanese Yen or German Deutschmark. The formula used to determine the amount
payable upon exercise of a foreign currency warrant may make the warrant
worthless unless the applicable foreign currency exchange rate moves in a
particular direction (e.g., unless the U.S. dollar appreciates or depreciates
against the particular foreign currency to which the warrant is linked or
indexed). Foreign currency warrants are severable from the debt obligations with
which they may be offered, and may be listed on exchanges. Foreign currency
warrants may be exercisable only in certain minimum amounts, and an investor
wishing to exercise warrants who possesses less than the minimum number required
for exercise may be required either to sell the warrants or to purchase
additional warrants, thereby incurring additional transaction costs. In the case
of any exercise of warrants, there may be a time delay between the time a holder
of warrants gives instructions to exercise and the time the exchange rate
relating to exercise is determined, during which time the exchange rate could
change significantly, thereby affecting both the market and cash settlement
values of the warrants being exercised. The expiration date of the warrants may
be accelerated if the warrants should be delisted from an exchange or if their
trading should be suspended permanently, which would result in the loss of any
remaining "time value" of the warrants (i.e., the difference between the current
market value and the exercise value of the warrants), and, in the case the
warrants were "out-of-the-money," in a total loss of the purchase price of the
warrants. Warrants are generally unsecured

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obligations of their issuers and are not standardized foreign currency options
issued by the Options Clearing Corporation ("OCC"). Unlike foreign currency
options issued by OCC, the terms of foreign exchange warrants generally will not
be amended in the event of governmental or regulatory actions affecting exchange
rates or in the event of the imposition of other regulatory controls affecting
the international currency markets. The initial public offering price of
foreign currency warrants is generally considerably in excess of the price that
a commercial user of foreign currencies might pay in the interbank market for a
comparable option involving significantly larger amounts of foreign currencies.
Foreign currency warrants are subject to significant foreign exchange risk,
including risks arising from complex political or economic factors.

Principal exchange rate linked securities. Principal exchange rate linked
securities ("PERLs(SM)") are debt obligations the principal on which is payable
at maturity in an amount that may vary based on the exchange rate between the
U.S. dollar and a particular foreign currency at or about that time. The return
on "standard" principal exchange rate linked securities is enhanced if the
foreign currency to which the security is linked appreciates against the U.S.
dollar, and is adversely affected by increases in the foreign exchange value of
the U.S. dollar; "reverse" principal exchange rate linked securities are like
the "standard" securities, except that their return is enhanced by increases in
the value of the U.S. dollar and adversely impacted by increases in the value of
foreign currency. Interest payments on the securities are generally made in U.S.
dollars at rates that reflect the degree of foreign currency risk assumed or
given up by the purchaser of the notes (i.e., at relatively higher interest
rates if the purchaser has assumed some of the foreign exchange risk, or
relatively lower interest rates if the issuer has assumed some of the foreign
exchange risk, based on the expectations of the current market). Principal
exchange rate linked securities may in limited cases be subject to acceleration
of maturity (generally, not without the consent of the holders of the
securities), which may have an adverse impact on the value of the principal
payment to be made at maturity.

Performance indexed paper. Performance indexed paper ("PIPs(SM)") is U.S.
dollar-denominated commercial paper the yield of which is linked to certain
foreign exchange rate movements. The yield to the investor on performance
indexed paper is established at maturity as a function of spot exchange rates
between the U.S. dollar and a designated currency as of or about that time
(generally, the index maturity two days prior to maturity). The yield to the
investor will be within a range stipulated at the time of purchase of the
obligation, generally with a guaranteed minimum rate of return that is below,
and a potential maximum rate of return that is above, market yields on U.S.
dollar-denominated commercial paper, with both the minimum and maximum rates of
return on the investment corresponding to the minimum and maximum values of the
spot exchange rate two business days prior to maturity.

Bank Obligations

Bank obligations in which the Portfolios may invest include certificates of
deposit, bankers' acceptances, and fixed time deposits. Certificates of deposit
are negotiable certificates issued against funds deposited in a commercial bank
for a definite period of time and earning a specified return. Bankers'
acceptances are negotiable drafts or bills of exchange, normally drawn by an
importer or exporter to pay for specific merchandise, which are "accepted" by a
bank, meaning, in effect, that the bank unconditionally agrees to pay the face
value of the instrument on maturity. Fixed time deposits are bank obligations
payable at a stated maturity date and bearing interest at a fixed rate. Fixed
time deposits may be withdrawn on demand by the investor, but may be subject to
early withdrawal penalties which vary depending upon market conditions and the
remaining maturity of the obligation. There are no contractual restrictions on
the right to transfer a beneficial interest in a fixed time deposit to a third
party, although there is no market for such deposits. A Portfolio will not
invest in fixed time deposits which (1) are not subject to prepayment or (2)
provide for withdrawal penalties upon prepayment (other than overnight deposits)
if, in the aggregate, more than 15% of its net assets (10% in the case of the
PIMCO Money Market Portfolio) would be invested in such deposits, repurchase
agreements maturing in more than seven days and other illiquid assets.

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The PIMCO Money Market and High Yield Bond Portfolios may invest in the
same types of bank obligations as the other Fixed Income Portfolios, but they
must be U.S. dollar-denominated. Subject to the Trust's limitation on
concentration of no more than 25% of its assets in the securities of issuers in
a particular industry, there is no limitation on the amount of a Portfolio's
assets which may be invested in obligations of foreign banks which meet the
conditions set forth herein.

Obligations of foreign banks involve somewhat different investment risks
than those affecting obligations of United States banks, including the
possibilities that their liquidity could be impaired because of future political
and economic developments, that their obligations may be less marketable than
comparable obligations of United States banks, that a foreign jurisdiction might
impose withholding taxes on interest income payable on those obligations, that
foreign deposits may be seized or nationalized, that foreign governmental
restrictions such as exchange controls may be adopted which might adversely
affect the payment of principal and interest on those obligations and that the
selection of those obligations may be more difficult because there may be less
publicly available information concerning foreign banks or the accounting,
auditing and financial reporting standards, practices and requirements
applicable to foreign banks may differ from those applicable to United States
banks. Foreign banks are not generally subject to examination by any U.S.
Government agency or instrumentality.

Loan Participations

Each Portfolio may purchase participations in commercial loans. Such
indebtedness may be secured or unsecured. Loan participations typically
represent direct participation in a loan to a corporate borrower, and generally
are offered by banks or other financial institutions or lending syndicates. The
Portfolios may participate in such syndications, or can buy part of a loan,
becoming a part lender. When purchasing loan participations, a Portfolio
assumes the credit risk associated with the corporate borrower and may assume
the credit risk associated with an interposed bank or other financial
intermediary. The participation interests in which a Portfolio intends to
invest may not be rated by any nationally recognized rating service.

A loan is often administered by an agent bank acting as agent for all
holders. The agent bank administers the terms of the loan, as specified in the
loan agreement. In addition, the agent bank is normally responsible for the
collection of principal and interest payments from the corporate borrower and
the apportionment of these payments to the credit of all institutions which are
parties to the loan agreement. Unless, under the terms of the loan or other
indebtedness, a Portfolio has direct recourse against the corporate borrower,
the Portfolio may have to rely on the agent bank or other financial intermediary
to apply appropriate credit remedies against a corporate borrower.

A financial institution's employment as agent bank might be terminated in
the event that it fails to observe a requisite standard of care or becomes
insolvent. A successor agent bank would generally be appointed to replace the
terminated agent bank, and assets held by the agent bank under the loan
agreement should remain available to holders of such indebtedness. However, if
assets held by the agent bank for the benefit of a Portfolio were determined to
be subject to the claims of the agent bank's general creditors, the Portfolio
might incur certain costs and delays in realizing payment on a loan or loan
participation and could suffer a loss of principal and/or interest. In
situations involving other interposed financial institutions (e.g., an insurance
company or governmental agency) similar risks may arise.

Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the corporate borrower for payment of principal and
interest. If a Portfolio does not receive scheduled interest or principal
payments on such indebtedness, the Portfolio's share price and yield could be
adversely affected. Loans that are fully secured offer a Portfolio more
protection than an unsecured loan in the event of non-payment of scheduled
interest or principal. However, there is no assurance that the liquidation of
collateral from a secured loan would satisfy the corporate borrower's
obligation, or that the collateral can be liquidated.

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The Portfolios may invest in loan participations with credit quality
comparable to that of issuers of its securities investments. Indebtedness of
companies whose creditworthiness is poor involves substantially greater risks,
and may be highly speculative. Some companies may never pay off their
indebtedness, or may pay only a small fraction of the amount owed.
Consequently, when investing in indebtedness of companies with poor credit, a
Portfolio bears a substantial risk of losing the entire amount invested.

Each Portfolio limits the amount of its total assets that it will invest in
any one issuer or in issuers within the same industry (see "Investment
Restrictions"). For purposes of these limits, a Portfolio generally will treat
the corporate borrower as the "issuer" of indebtedness held by the Portfolio. In
the case of loan participations where a bank or other lending institution serves
as a financial intermediary between a Portfolio and the corporate borrower, if
the participation does not shift to the Portfolio the direct debtor-creditor
relationship with the corporate borrower, Securities and Exchange Commission
("SEC") interpretations require the Portfolio to treat both the lending bank or
other lending institution and the corporate borrower as "issuers" for the
purposes of determining whether the Portfolio has invested more than 5% of its
total assets in a single issuer. Treating a financial intermediary as an issuer
of indebtedness may restrict a Portfolios' ability to invest in indebtedness
related to a single financial intermediary, or a group of intermediaries engaged
in the same industry, even if the underlying borrowers represent many different
companies and industries.

Loans and other types of direct indebtedness may not be readily marketable
and may be subject to restrictions on resale. In some cases, negotiations
involved in disposing of indebtedness may require weeks to complete.
Consequently, some indebtedness may be difficult or impossible to dispose of
readily at what the Adviser believes to be a fair price. In addition, valuation
of illiquid indebtedness involves a greater degree of judgment in determining a
Portfolio's net asset value than if that value were based on available market
quotations, and could result in significant variations in the Portfolio's daily
share price. At the same time, some loan interests are traded among certain
financial institutions and accordingly may be deemed liquid. As the market for
different types of indebtedness develops, the liquidity of these instruments is
expected to improve. In addition, the Portfolios currently intend to treat
indebtedness for which there is no readily available market as illiquid for
purposes of the Portfolios' limitation on illiquid investments. Investments in
loan participations are considered to be debt obligations for purposes of the
Trust's investment restriction relating to the lending of funds or assets by a
Portfolio.

Investments in loans through a direct assignment of the financial
institution's interests with respect to the loan may involve additional risks to
the Portfolios. For example, if a loan is foreclosed, a Portfolio could become
part owner of any collateral, and would bear the costs and liabilities
associated with owning and disposing of the collateral. In addition, it is
conceivable that under emerging legal theories of lender liability, a Portfolio
could be held liable as co-lender. It is unclear whether loans and other forms
of direct indebtedness offer securities law protections against fraud and
misrepresentation. In the absence of definitive regulatory guidance, the
Portfolios rely on the Adviser's research in an attempt to avoid situations
where fraud or misrepresentation could adversely affect the Portfolios.

Delayed Funding Loans and Revolving Credit Facilities

The Fixed Income Portfolios (except the PIMCO Money Market Portfolio) may
enter into, or acquire participations in, delayed funding loans and revolving
credit facilities. Delayed funding loans and revolving credit facilities are
borrowing arrangements in which the lender agrees to make loans up to a maximum
amount upon demand by the borrower during a specified term. A revolving credit
facility differs from a delayed funding loan in that as the borrower repays the
loan, an amount equal to the repayment may be borrowed again during the term of
the revolving credit facility. Delayed funding loans and revolving credit
facilities usually provide for floating or variable rates of interest. These
commitments may have the effect of requiring a Portfolio to increase its
investment in a company at a time when it might not otherwise decide to do so
(including at a time when the company's financial condition makes it unlikely
that such amounts will be repaid). To the extent that a Portfolio is committed

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to advance additional funds, it will at all times segregate assets, determined
to be liquid by the Adviser in accordance with procedures established by the
Board of Trustees, in an amount sufficient to meet such commitments. The Fixed
Income Portfolios may invest in delayed funding loans and revolving credit
facilities with credit quality comparable to that of issuers of its securities
investments. Delayed funding loans and revolving credit facilities may be
subject to restrictions on transfer, and only limited opportunities may exist to
resell such instruments. As a result, a Portfolio may be unable to sell such
investments at an opportune time or may have to resell them at less than fair
market value. The Fixed Income Portfolios currently intend to treat delayed
funding loans and revolving credit facilities for which there is no readily
available market as illiquid for purposes of the Portfolios' limitation on
illiquid investments. For a further discussion of the risks involved in
investing in loan participations and other forms of direct indebtedness see
"Loan Participations." Participation interests in revolving credit facilities
will be subject to the limitations discussed in "Loan Participations." Delayed
funding loans and revolving credit facilities are considered to be debt
obligations for purposes of the Trust's investment restriction relating to the
lending of funds or assets by a Portfolio.

Loans of Portfolio Securities

For the purpose of achieving income, each Portfolio may lend its portfolio
securities to brokers, dealers, and other financial institutions, provided: (i)
the loan is secured continuously by collateral consisting of U.S. Government
securities, cash or cash equivalents (negotiable certificates of deposits,
bankers' acceptances or letters of credit) maintained on a daily mark-to-market
basis in an amount at least equal to the current market value of the securities
loaned; (ii) the Portfolio may at any time call the loan and obtain the return
of the securities loaned; (iii) the Portfolio will receive any interest or
dividends paid on the loaned securities; and (iv) the aggregate market value of
securities loaned will not at any time exceed 331/3% of the total assets of the
Portfolio. Each Portfolio's performance will continue to reflect the receipt of
either interest through investment of cash collateral by the Portfolio in
permissible investments, or a fee, if the collateral is U.S. Government
securities. Securities lending involves the risk of loss of rights in the
collateral or delay in recovery of the collateral should the borrower fail to
return the securities loaned or become insolvent. The Portfolios may pay
lending fees to the party arranging the loan.

Short Sales

Each of the Portfolios except for the PIMCO High Yield Bond Portfolio may
make short sales of securities as part of their overall portfolio management
strategies involving the use of derivative instruments and to offset potential
declines in long positions in similar securities. A short sale is a transaction
in which a Portfolio sells a security it does not own in anticipation that the
market price of that security will decline.

When a Portfolio makes a short sale, it must borrow the security sold short
and deliver it to the broker-dealer through which it made the short sale as
collateral for its obligation to deliver the security upon conclusion of the
sale. The Portfolio may have to pay a fee to borrow particular securities and
is often obligated to pay over any accrued interest and dividends on such
borrowed securities.

If the price of the security sold short increases between the time of the
short sale and the time and the Portfolio replaces the borrowed security, the
Portfolio will incur a loss; conversely, if the price declines, the Portfolio
will realize a capital gain. Any gain will be decreased, and any loss
increased, by the transaction costs described above. The successful use of
short selling may be adversely affected by imperfect correlation between
movements in the price of the security sold short and the securities being
hedged.

To the extent that a Portfolio engages in short sales, it will provide
collateral to the broker-dealer and (except in the case of short sales "against
the box") will maintain additional asset coverage in the form of assets
determined to be liquid by the Adviser in accordance with procedures established
by the Board of Trustees, in a segregated account. Each Portfolio does not
intend to enter into short sales (other

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than those "against the box") if immediately after such sale the aggregate of
the value of all collateral plus the amount of the segregated assets exceeds
one-third of the value of the Portfolio's net assets. This percentage may be
varied by action of the Trustees. A short sale is "against the box" to the
extent that the Portfolio contemporaneously owns, or has the right to obtain at
no added cost, securities identical to those sold short. The Portfolios will
engage in short selling to the extent permitted by the 1940 Act and rules and
interpretations thereunder.

When-Issued, Delayed Delivery, and Forward Commitment Transactions

Each of the Portfolios may purchase or sell securities on a when-issued,
delayed delivery, or forward commitment basis. When such purchases are
outstanding, the Portfolio will segregate until the settlement date assets
determined to be liquid by the Adviser in accordance with procedures established
by the Board of Trustees, in an amount sufficient to meet the purchase price.
Typically, no income accrues on securities a Portfolio has committed to purchase
prior to the time delivery of the securities is made, although a Portfolio may
earn income on securities it has segregated.

When purchasing a security on a when-issued, delayed delivery, or forward
commitment basis, the Portfolio assumes the rights and risks of ownership of the
security, including the risk of price and yield fluctuations, and takes such
fluctuations into account when determining its net asset value. Because the
Portfolio is not required to pay for the security until the delivery date, these
risks are in addition to the risks associated with the Portfolio's other
investments. If the Portfolio remains substantially fully invested at a time
when when-issued, delayed delivery, or forward commitment purchases are
outstanding, the purchases may result in a form of leverage. When the Portfolio
has sold a security on a when-issued, delayed delivery, or forward commitment
basis, the Portfolio does not participate in future gains or losses with respect
to the security. If the other party to a transaction fails to deliver or pay for
the securities, the Portfolio could miss a favorable price or yield opportunity
or could suffer a loss. A Portfolio may dispose of or renegotiate a transaction
after it is entered into, and may sell when-issued, delayed delivery or forward
commitment securities before they are delivered, which may result in a capital
gain or loss. There is no percentage limitation on the extent to which the
Portfolios may purchase or sell securities on a when-issued, delayed delivery,
or forward commitment basis.

Derivative Instruments

In pursuing their individual objectives the Portfolios (except the PIMCO
Money Market Portfolio) may, to the extent permitted by their investment
objectives and policies, purchase and sell (write) both put options and call
options on securities, securities indexes, and foreign currencies, and enter
into interest rate, foreign currency and index futures contracts and purchase
and sell options on such futures contracts ("futures options") for hedging
purposes or as part of their overall investment strategies, except that those
Portfolios that may not invest in foreign currency-denominated securities may
not enter into transactions involving currency futures or options. The
Portfolios also may purchase and sell foreign currency options for purposes of
increasing exposure to a foreign currency or to shift exposure to foreign
currency fluctuations from one country to another. The Portfolios also may
enter into swap agreements with respect to interest rates and indexes of
securities, and to the extent it may invest in foreign currency-denominated
securities, may enter into swap agreements with respect to foreign currencies.
The Portfolios may invest in structured notes. If other types of financial
instruments, including other types of options, futures contracts, or futures
options are traded in the future, a Portfolio may also use those instruments,
provided that the Trustees determine that their use is consistent with the
Portfolio's investment objective. The value of some derivative instruments in
which the Portfolios invest may be particularly sensitive to changes in
prevailing interest rates, and, like the other investments of the Portfolios,
the ability of a Portfolio to successfully utilize these instruments may depend
in part upon the ability of the Adviser to forecast interest rates and other
economic factors correctly. If the Adviser incorrectly forecasts such factors
and has taken positions in derivative instruments contrary to prevailing market
trends, the Portfolios could be exposed to the risk of loss. The Portfolios
might not employ any of the strategies described below, and no assurance can be
given that any strategy used will succeed. If the

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Adviser incorrectly forecasts interest rates, market values or other economic
factors in using a derivatives strategy for a Portfolio, the Portfolio might
have been in a better position if it had not entered into the transaction at
all. Also, suitable derivative transactions may not be available in all
circumstances.

The use of these strategies involves certain special risks, including a
possible imperfect correlation, or even no correlation, between price movements
of derivative instruments and price movements of related investments. While some
strategies involving derivative instruments can reduce the risk of loss, they
can also reduce the opportunity for gain or even result in losses by offsetting
favorable price movements in related investments or otherwise due to the
possible inability of a Portfolio to purchase or sell a portfolio security at a
time that otherwise would be favorable, or the possible need to sell a portfolio
security at a disadvantageous time because the Portfolio is required to maintain
asset coverage or offsetting positions in connection with transactions in
derivative instruments, and the possible inability of a Portfolio to close out
or to liquidate its derivatives positions. In addition, a Portfolio's use of
such instruments may cause the Fund to realize higher amounts of short-term
capital gains (generally taxed at ordinary income tax rates) than if it had not
used such instruments.

Options on Securities and Indexes. A Portfolio may, to the extend
specified herein or in the Prospectus, purchase and sell both put and call
options on fixed income or other securities or indexes in standardized contracts
traded on foreign or domestic securities exchanges, boards of trade, or similar
entities, or quoted on NASDAQ or on a regulated foreign over-the-counter market,
and agreements, sometimes called cash puts, which may accompany the purchase of
a new issue of bonds from a dealer.

An option on a security (or index) is a contract that gives the holder of
the option, in return for a premium, the right to buy from (in the case of a
call) or sell to (in the case of a put) the writer of the option the security
underlying the option (or the cash value of the index) at a specified exercise
price at any time during the term of the option. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price or to pay the exercise
price upon delivery of the underlying security. Upon exercise, the writer of an
option on an index is obligated to pay the difference between the cash value of
the index and the exercise price multiplied by the specified multiplier for the
index option. (An index is designed to reflect features of a particular
financial or securities market, a specific group of financial instruments or
securities, or certain economic indicators.)

A Portfolio will write call options and put options only if they are
"covered." In the case of a call option on a security, the option is "covered"
if the Portfolio owns the security underlying the call or has an absolute and
immediate right to acquire that security without additional cash consideration
(or, if additional cash consideration is required, cash or other assets
determined to be liquid by the Adviser in accordance with procedures established
by the Board of Trustees, in such amount are placed in a segregated account by
its custodian) upon conversion or exchange of other securities held by the
Portfolio. For a call option on an index, the option is covered if the
Portfolio maintains with its custodian assets determined to be liquid by the
Adviser in accordance with procedures established by the Board of Trustees, in
an amount equal to the contract value of the index. A call option is also
covered if the Portfolio holds a call on the same security or index as the call
written where the exercise price of the call held is (i) equal to or less than
the exercise price of the call written, or (ii) greater than the exercise price
of the call written, provided the difference is maintained by the Portfolio in
segregated assets determined to be liquid by the Adviser in accordance with
procedures established by the Board of Trustees, in a segregated account with
its custodian. A put option on a security or an index is "covered" if the
Portfolio segregates assets determined to be liquid by the Adviser in accordance
with procedures established by the Board of Trustees, equal to the exercise
price in a segregated account with its custodian. A put option is also covered
if the Portfolio holds a put on the same security or index as the put written
where the exercise price of the put held is (i) equal to or greater than the
exercise price of the put written, or (ii) less than the exercise price of the
put written, provided the difference is maintained by the Portfolio in

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segregated assets determined to be liquid by the Adviser in accordance with
procedures established by the Board of Trustees, in a segregated account with
its custodian.

If an option written by a Portfolio expires unexercised, the Portfolio
realizes a capital gain equal to the premium received at the time the option was
written. If an option purchased by a Portfolio expires unexercised, the
Portfolio realizes a capital loss equal to the premium paid. Prior to the
earlier of exercise or expiration, an exchange traded option may be closed out
by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price, and expiration). There
can be no assurance, however, that a closing purchase or sale transaction can be
effected when the Portfolio desires.

A Portfolio may sell put or call options it has previously purchased, which
could result in a net gain or loss depending on whether the amount realized on
the sale is more or less than the premium and other transaction costs paid on
the put or call option which is sold. Prior to exercise or expiration, an
option may be closed out by an offsetting purchase or sale of an option of the
same series. A Portfolio will realize a capital gain from a closing purchase
transaction if the cost of the closing option is less than the premium received
from writing the option, or, if it is more, the Portfolio will realize a capital
loss. If the premium received from a closing sale transaction is more than the
premium paid to purchase the option, the Portfolio will realize a capital gain
or, if it is less, the Portfolio will realize a capital loss. The principal
factors affecting the market value of a put or a call option include supply and
demand, interest rates, the current market price of the underlying security or
index in relation to the exercise price of the option, the volatility of the
underlying security or index, and the time remaining until the expiration date.

The premium paid for a put or call option purchased by a Portfolio is an
asset of the Portfolio. The premium received for an option written by a
Portfolio is recorded as a deferred credit. The value of an option purchased or
written is marked to market daily and is valued at the closing price on the
exchange on which it is traded or, if not traded on an exchange or no closing
price is available, at the mean between the last bid and asked prices.

The Portfolios may write covered straddles consisting of a combination of a
call and a put written on the same underlying security. A straddle will be
covered when sufficient assets are deposited to meet the Portfolios' immediate
obligations. The Portfolios may use the same liquid assets to cover both the
call and put options where the exercise price of the call and put are the same,
or the exercise price of the call is higher than that of the put. In such
cases, the Portfolios will also segregate liquid assets equivalent to the
amount, if any, by which the put is "in the money."

Risks Associated with Options on Securities and Indexes. There are several
risks associated with transactions in options on securities and on indexes. For
example, there are significant differences between the securities and options
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. A decision as to
whether, when and how to use options involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events.

During the option period, the covered call writer has, in return for the
premium on the option, given up the opportunity to profit from a price increase
in the underlying security above the exercise price, but, as long as its
obligation as a writer continues, has retained the risk of loss should the price
of the underlying security decline. The writer of an option has no control over
the time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying security at the exercise price. If a put
or call option purchased by the Portfolio is not sold when it has remaining
value, and if the market price of the underlying security remains equal to or
greater than the exercise price (in the case of a put), or remains less than or
equal to the exercise price (in the case of a call), the Portfolio will lose its
entire investment in the option. Also, where a put or call option on a
particular security is purchased to hedge against price movements in a

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related security, the price of the put or call option may move more or less than
the price of the related security.

There can be no assurance that a liquid market will exist when a Portfolio
seeks to close out an option position. If a Portfolio were unable to close out
an option that it had purchased on a security, it would have to exercise the
option in order to realize any profit or the option may expire worthless. If a
Portfolio were unable to close out a covered call option that it had written on
a security, it would not be able to sell the underlying security unless the
option expired without exercise. As the writer of a covered call option, a
Portfolio forgoes, during the option's life, the opportunity to profit from
increases in the market value of the security covering the call option above the
sum of the premium and the exercise price of the call.

If trading were suspended in an option purchased by a Portfolio, the
Portfolio would not be able to close out the option. If restrictions on
exercise were imposed, the Portfolio might be unable to exercise an option it
has purchased. Except to the extent that a call option on an index written by
the Portfolio is covered by an option on the same index purchased by the
Portfolio, movements in the index may result in a loss to the Portfolio;
however, such losses may be mitigated by changes in the value of the Portfolio's
securities during the period the option was outstanding.

Foreign Currency Options. A Portfolio that invests in foreign currency
denominated securities may buy or sell put and call options on foreign
currencies. A Portfolio may buy or sell put and call options on foreign
currencies either on exchanges or in the over-the-counter market. A put option
on a foreign currency gives the purchaser of the option the right to sell a
foreign currency at the exercise price until the option expires. A call option
on a foreign currency gives the purchaser of the option the right to purchase
the currency at the exercise price until the option expires. Currency options
traded on U.S. or other exchanges may be subject to position limits which may
limit the ability of a Portfolio to reduce foreign currency risk using such
options. Over-the-counter options differ from traded options in that they are
two-party contracts with price and other terms negotiated between buyer and
seller, and generally do not have as much market liquidity as exchange-traded
options.

Futures Contracts and Options on Futures Contracts. Each of the Fixed
Income Portfolios (except the PIMCO Money Market Portfolio) may invest in
interest rate futures contracts and options thereon ("futures options"), and to
the extent it may invest in foreign currency-denominated securities, may also
invest in foreign currency futures contracts and options thereon. The PIMCO
StocksPLUS Growth and Income Portfolio and the PIMCO Strategic Balanced
Portfolio may invest in interest rate, stock index and foreign currency futures
contracts and options thereon.

An interest rate, foreign currency or index futures contract provides for
the future sale by one party and purchase by another party of a specified
quantity of a financial instrument, foreign currency or the cash value of an
index at a specified price and time. A futures contract on an index is an
agreement pursuant to which two parties agree to take or make delivery of an
amount of cash equal to the difference between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. Although the value of an index might be a
function of the value of certain specified securities, no physical delivery of
these securities is made. A public market exists in futures contracts covering
a number of indexes as well as financial instruments and foreign currencies,
including: the S&P 500; the S&P Midcap 400; the Nikkei 225; the NYSE composite;
U.S. Treasury bonds; U.S. Treasury notes; GNMA Certificates; three-month U.S.
Treasury bills; 90-day commercial paper; bank certificates of deposit;
Eurodollar certificates of deposit; the Australian dollar; the Canadian dollar;
the British pound; the German mark; the Japanese yen; the French franc; the
Swiss franc; the Mexican peso; and certain multinational currencies, such as the
euro. It is expected that other futures contracts will be developed and traded
in the future.

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A Portfolio may purchase and write call and put futures options, as
specified for that Portfolio in the Prospectus. Futures options possess many of
the same characteristics as options on securities and indexes (discussed above).
A futures option gives the holder the right, in return for the premium paid, to
assume a long position (call) or short position (put) in a futures contract at a
specified exercise price at any time during the period of the option. Upon
exercise of a call option, the holder acquires a long position in the futures
contract and the writer is assigned the opposite short position. In the case of
a put option, the opposite is true.

To comply with applicable rules of the Commodity Futures Trading Commission
("CFTC") under which the Trust and the Portfolios avoid being deemed a
"commodity pool" or a "commodity pool operator," each Portfolio intends
generally to limit its use of futures contracts and futures options to "bona
fide hedging" transactions, as such term is defined in applicable regulations,
interpretations and practice. For example, a Portfolio might use futures
contracts to hedge against anticipated changes in interest rates that might
adversely affect either the value of the Portfolio's securities or the price of
the securities which the Portfolio intends to purchase. A Portfolio's hedging
activities may include sales of futures contracts as an offset against the
effect of expected increases in interest rates, and purchases of futures
contracts as an offset against the effect of expected declines in interest
rates. Although other techniques could be used to reduce that Portfolio's
exposure to interest rate fluctuations, the Portfolio may be able to hedge its
exposure more effectively and perhaps at a lower cost by using futures contracts
and futures options.

A Portfolio will only enter into futures contracts and futures options
which are standardized and traded on a U.S. or foreign exchange, board of trade,
or similar entity, or quoted on an automated quotation system.

When a purchase or sale of a futures contract is made by a Portfolio, the
Portfolio is required to deposit with its custodian (or broker, if legally
permitted) a specified amount of assets determined to be liquid by the Adviser
in accordance with procedures established by the Board of Trustees ("initial
margin"). The margin required for a futures contract is set by the exchange on
which the contract is traded and may be modified during the term of the
contract. Margin requirements on foreign exchanges may be different than U.S.
exchanges. The initial margin is in the nature of a performance bond or good
faith deposit on the futures contract which is returned to the Portfolio upon
termination of the contract, assuming all contractual obligations have been
satisfied. Each Portfolio expects to earn interest income on its initial margin
deposits. A futures contract held by a Portfolio is valued daily at the
official settlement price of the exchange on which it is traded. Each day the
Portfolio pays or receives cash, called "variation margin," equal to the daily
change in value of the futures contract. This process is known as "marking to
market." Variation margin does not represent a borrowing or loan by a Portfolio
but is instead a settlement between the Portfolio and the broker of the amount
one would owe the other if the futures contract expired. In computing daily net
asset value, each Portfolio will mark to market its open futures positions.

A Portfolio is also required to deposit and maintain margin with respect to
put and call options on futures contracts written by it. Such margin deposits
will vary depending on the nature of the underlying futures contract (and the
related initial margin requirements), the current market value of the option,
and other futures positions held by the Portfolio.

Although some futures contracts call for making or taking delivery of the
underlying securities, generally these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Portfolio realizes a
capital gain, or if it is more, the Portfolio realizes a capital loss.
Conversely, if an offsetting sale price is more than the original purchase
price, the Portfolio realizes a capital gain, or if it is less, the Portfolio
realizes a capital loss. The transaction costs must also be included in these
calculations.

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The Portfolios may write covered straddles consisting of a call and a put
written on the same underlying futures contract. A straddle will be covered
when sufficient assets are deposited to meet the Portfolios' immediate
obligations. A Portfolio may use the same liquid assets to cover both the call
and put options where the exercise price of the call and put are the same, or
the exercise price of the call is higher than that of the put. In such cases,
the Portfolios will also segregate liquid assets equivalent to the amount, if
any, by which the put is "in the money."

Limitations on Use of Futures and Futures Options. In general, the
Portfolios intend to enter into positions in futures contracts and related
options only for "bona fide hedging" purposes. With respect to positions in
futures and related options that do not constitute bona fide hedging positions,
a Portfolio will not enter into a futures contract or futures option contract
if, immediately thereafter, the aggregate initial margin deposits relating to
such positions plus premiums paid by it for open futures option positions, less
the amount by which any such options are "in-the-money," would exceed 5% of the
Portfolio's net assets. A call option is "in-the-money" if the value of the
futures contract that is the subject of the option exceeds the exercise price.
A put option is "in-the-money" if the exercise price exceeds the value of the
futures contract that is the subject of the option.

When purchasing a futures contract, a Portfolio will maintain with its
custodian (and mark-to-market on a daily basis) assets determined to be liquid
by the Adviser in accordance with procedures established by the Board of
Trustees, that, when added to the amounts deposited with a futures commission
merchant as margin, are equal to the market value of the futures contract.
Alternatively, the Portfolio may "cover" its position by purchasing a put option
on the same futures contract with a strike price as high or higher than the
price of the contract held by the Portfolio.

When selling a futures contract, a Portfolio will maintain with its
custodian (and mark-to-market on a daily basis) assets determined to be liquid
by the Adviser in accordance with procedures established by the Board of
Trustees, that are equal to the market value of the instruments underlying the
contract. Alternatively, the Portfolio may "cover" its position by owning the
instruments underlying the contract (or, in the case of an index futures
contract, a portfolio with a volatility substantially similar to that of the
index on which the futures contract is based), or by holding a call option
permitting the Portfolio to purchase the same futures contract at a price no
higher than the price of the contract written by the Portfolio (or at a higher
price if the difference is maintained in liquid assets with the Trust's
custodian).

When selling a call option on a futures contract, a Portfolio will maintain
with its custodian (and mark-to-market on a daily basis) assets determined to be
liquid by the Adviser in accordance with procedures established by the Board of
Trustees, that, when added to the amounts deposited with a futures commission
merchant as margin, equal the total market value of the futures contract
underlying the call option. Alternatively, the Portfolio may cover its position
by entering into a long position in the same futures contract at a price no
higher than the strike price of the call option, by owning the instruments
underlying the futures contract, or by holding a separate call option permitting
the Portfolio to purchase the same futures contract at a price not higher than
the strike price of the call option sold by the Portfolio.

When selling a put option on a futures contract, a Portfolio will maintain
with its custodian (and mark-to-market on a daily basis) assets determined to be
liquid by the Adviser in accordance with procedures established by the Board of
Trustees, that equal the purchase price of the futures contract, less any margin
on deposit. Alternatively, the Portfolio may cover the position either by
entering into a short position in the same futures contract, or by owning a
separate put option permitting it to sell the same futures contract so long as
the strike price of the purchased put option is the same or higher than the
strike price of the put option sold by the Portfolio.

To the extent that securities with maturities greater than one year are
used to segregate assets to cover a Portfolio's obligations under futures
contracts and related options, such use will not eliminate the risk of a form of
leverage, which may tend to exaggerate the effect on net asset value of any
increase or decrease in the market value of a Portfolio's portfolio, and may
require liquidation of portfolio positions

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<PAGE>

when it is not advantageous to do so. However, any potential risk of leverage
resulting from the use of securities with maturities greater than one year may
be mitigated by the overall duration limit on a Portfolio's portfolio
securities. Thus, the use of a longer-term security may require a Portfolio to
hold offsetting short-term securities to balance the Portfolio's portfolio such
that the Portfolio's duration does not exceed the maximum permitted for the
Portfolio in the Prospectus.

The requirements for qualification as a regulated investment company also
may limit the extent to which a Portfolio may enter into futures, futures
options or forward contracts. See "Taxation."

Risks Associated with Futures and Futures Options. There are several risks
associated with the use of futures contracts and futures options as hedging
techniques. A purchase or sale of a futures contract may result in losses in
excess of the amount invested in the futures contract. There can be no
guarantee that there will be a correlation between price movements in the
hedging vehicle and in the Portfolio securities being hedged. In addition,
there are significant differences between the securities and futures markets
that could result in an imperfect correlation between the markets, causing a
given hedge not to achieve its objectives. The degree of imperfection of
correlation depends on circumstances such as variations in speculative market
demand for futures and futures options on securities, including technical
influences in futures trading and futures options, and differences between the
financial instruments being hedged and the instruments underlying the standard
contracts available for trading in such respects as interest rate levels,
maturities, and creditworthiness of issuers. A decision as to whether, when and
how to hedge involves the exercise of skill and judgment, and even a well-
conceived hedge may be unsuccessful to some degree because of market behavior or
unexpected interest rate trends.

Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because the
limit may work to prevent the liquidation of unfavorable positions. For
example, futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses.

There can be no assurance that a liquid market will exist at a time when a
Portfolio seeks to close out a futures or a futures option position, and that
Portfolio would remain obligated to meet margin requirements until the position
is closed. In addition, many of the contracts discussed above are relatively
new instruments without a significant trading history. As a result, there can
be no assurance that an active secondary market will develop or continue to
exist.

Additional Risks of Options on Securities, Futures Contracts, Options on
Futures Contracts, and Forward Currency Exchange Contracts and Options Thereon.
Options on securities, futures contracts, options on futures contracts, and
options on currencies may be traded on foreign exchanges. Such transactions may
not be regulated as effectively as similar transactions in the United States;
may not involve a clearing mechanism and related guarantees, and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities. The value of such positions also could be adversely affected by (i)
other complex foreign political, legal and economic factors, (ii) lesser
availability than in the United States of data on which to make trading
decisions, (iii) delays in the Trust's ability to act upon economic events
occurring in foreign markets during non-business hours in the United States,
(iv) the imposition of different exercise and settlement terms and procedures
and margin requirements than in the United States, and (v) lesser trading
volume.

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Swap Agreements. The Portfolios (except the PIMCO Equity Income, Capital
Appreciation, Mid-Cap Growth and Small-Cap Value Portfolios) may enter into
interest rate, index and, to the extent it may invest in foreign currency-
denominated securities, currency exchange rate swap agreements. These
transactions are entered into in a attempt to obtain a particular return when it
is considered desirable to do so, possibly at a lower cost to the Portfolio than
if the Portfolio had invested directly in an instrument that yielded that
desired return. Swap agreements are two party contracts entered into primarily
by institutional investors for periods ranging from a few weeks to more than one
year. In a standard "swap" transaction, two parties agree to exchange the
returns (or differentials in rates of return) earned or realized on particular
predetermined investments or instruments, which may be adjusted for an interest
factor. The gross returns to be exchanged or "swapped" between the parties are
generally calculated with respect to a "notional amount," i.e., the return on or
increase in value of a particular dollar amount invested at a particular
interest rate, in a particular foreign currency, or in a "basket" of securities
representing a particular index. Forms of swap agreements include interest rate
caps, under which, in return for a premium, one party agrees to make payments to
the other to the extent that interest rates exceed a specified rate, or "cap";
interest rate floors, under which, in return for a premium, one party agrees to
make payments to the other to the extent that interest rates fall below a
specified rate, or "floor"; and interest rate collars, under which a party sells
a cap and purchases a floor or vice versa in an attempt to protect itself
against interest rate movements exceeding given minimum or maximum levels.

Most swap agreements entered into by the Portfolios would calculate the
obligations of the parties to the agreement on a "net basis." Consequently, a
Portfolio's current obligations (or rights) under a swap agreement will
generally be equal only to the net amount to be paid or received under the
agreement based on the relative values of the positions held by each party to
the agreement (the "net amount"). A Portfolio's current obligations under a
swap agreement will be accrued daily (offset against any amounts owing to the
Portfolio) and any accrued but unpaid net amounts owed to a swap counterparty
will be covered by segregation of assets determined to be liquid by the Adviser
in accordance with procedures established by the Board of Trustees, to avoid any
potential leveraging of the Portfolio's portfolio. Obligations under swap
agreements so covered will not be construed to be "senior securities" for
purposes of the Portfolio's investment restriction concerning senior securities.
A Portfolio will not enter into a swap agreement with any single party if the
net amount owed or to be received under existing contracts with that party would
exceed 5% of the Portfolio's assets.

Whether a Portfolio's use of swap agreements will be successful in
furthering its investment objective of total return will depend on the Adviser's
ability to predict correctly whether certain types of investments are likely to
produce greater returns than other investments. Because they are two party
contracts and because they may have terms of greater than seven days, swap
agreements may be considered to be illiquid. Moreover, a Portfolio bears the
risk of loss of the amount expected to be received under a swap agreement in the
event of the default or bankruptcy of a swap agreement counterparty. The
Portfolios will enter into swap agreements only with counterparties that meet
certain standards of creditworthiness (generally, such counterparties would have
to be eligible counterparties under the terms of the Portfolios' repurchase
agreement guidelines). Certain restrictions imposed on the Portfolios by the
Internal Revenue Code may limit the Portfolios' ability to use swap agreements.
The swaps market is a relatively new market and is largely unregulated. It is
possible that developments in the swaps market, including potential government
regulation, could adversely affect a Portfolio's ability to terminate existing
swap agreements or to realize amounts to be received under such agreements.

Certain swap agreements are exempt from most provisions of the Commodity
Exchange Act ("CEA") and, therefore, are not regulated as futures or commodity
option transactions under the CEA, pursuant to regulations approved by the CFTC
effective February 22, 1993. To qualify for this exemption, a swap agreement
must be entered into by "eligible participants," which includes the following,
provided the participants' total assets exceed established levels: a bank or
trust company, savings association or credit union, insurance company,
investment company subject to regulation under the 1940 Act, commodity pool,
corporation, partnership, proprietorship, organization, trust or other entity,

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<PAGE>

employee benefit plan, governmental entity, broker-dealer, futures commission
merchant, natural person, or regulated foreign person. To be eligible, natural
persons and most other entities must have total assets exceeding $10 million;
commodity pools and employee benefit plans must have assets exceeding $5
million. In addition, an eligible swap transaction must meet three conditions.
First, the swap agreement may not be part of a fungible class of agreements that
are standardized as to their material economic terms. Second, the
creditworthiness of parties with actual or potential obligations under the swap
agreement must be a material consideration in entering into or determining the
terms of the swap agreement, including pricing, cost or credit enhancement
terms. Third, swap agreements may not be entered into and traded on or through
a multilateral transaction execution facility.

This exemption is not exclusive, and participants may continue to rely on
existing exclusions for swaps, such as the Policy Statement issued in July 1989
which recognized a safe harbor for swap transactions from regulation as futures
or commodity option transactions under the CEA or its regulations. The Policy
Statement applies to swap transactions settled in cash that (1) have
individually tailored terms, (2) lack exchange-style offset and the use of a
clearing organization or margin system, (3) are undertaken in conjunction with a
line of business, and (4) are not marketed to the public.

Structured Notes. Structured notes are derivative debt securities, the
interest rate or principal of which is determined by an unrelated indicator.
Indexed securities include structured notes as well as securities other than
debt securities, the interest rate or principal of which is determined by an
unrelated indicator. Indexed securities may include a multiplier that
multiplies the indexed element by a specified factor and, therefore, the value
of such securities may be very volatile. To the extent a Portfolio invests in
these securities, however, the Adviser analyzes these securities in its overall
assessment of the effective duration of the Portfolio's portfolio in an effort
to monitor the Portfolio's interest rate risk.

Warrants to Purchase Securities

The Portfolios may invest in or acquire warrants to purchase equity or
fixed income securities. Bonds with warrants attached to purchase equity
securities have many characteristics of convertible bonds and their prices may,
to some degree, reflect the performance of the underlying stock. Bonds also may
be issued with warrants attached to purchase additional fixed income securities
at the same coupon rate. A decline in interest rates would permit a Portfolio
to buy additional bonds at the favorable rate or to sell the warrants at a
profit. If interest rates rise, the warrants would generally expire with no
value.

A Portfolio will not invest more than 5% of its net assets, valued at the
lower of cost or market, in warrants to purchase securities. Warrants acquired
in units or attached to securities will be deemed without value for purposes of
this restriction.

Hybrid Instruments

A hybrid instrument can combine the characteristics of securities, futures,
and options. For example, the principal amount or interest rate of a hybrid
could be tied (positively or negatively) to the price of some commodity,
currency or securities index or another interest rate (each a "benchmark"). The
interest rate or (unlike most fixed income securities) the principal amount
payable at maturity of a hybrid security may be increased or decreased,
depending on changes in the value of the benchmark.

Hybrids can be used as an efficient means of pursuing a variety of
investment goals, including currency hedging, duration management, and increased
total return. Hybrids may not bear interest or pay dividends. The value of a
hybrid or its interest rate may be a multiple of a benchmark and, as a result,
may be leveraged and move (up or down) more steeply and rapidly than the
benchmark. These benchmarks may be sensitive to economic and political events,
such as commodity shortages and currency devaluations, which cannot be readily
foreseen by the purchaser of a hybrid. Under certain conditions, the redemption
value of a hybrid could be zero. Thus, an investment in a hybrid may entail
significant market risks that are not associated with a similar investment in a
traditional, U.S. dollar-denominated bond that

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<PAGE>

has a fixed principal amount and pays a fixed rate or floating rate of interest.
The purchase of hybrids also exposes a Portfolio to the credit risk of the
issuer of the hybrids. These risks may cause significant fluctuations in the net
asset value of the Portfolio. Accordingly, no Portfolio will invest more than 5%
of its assets in hybrid instruments.

Certain issuers of structured products such as hybrid instruments may be
deemed to be investment companies as defined in the 1940 Act. As a result, the
Portfolios' investments in these products will be subject to limits applicable
to investments in investment companies and may be subject to restrictions
contained in the 1940 Act.

Event-Linked Bonds

Each of the Portfolios (except the PIMCO Money Market Portfolio) may invest
in "event-linked bonds." Event-linked bonds are fixed income securities, for
which the return of principal and payment of interest is contingent on the non-
occurrence of a specific "trigger" event, such as a hurricane, earthquake., or
other physical or weather-related phenomenon. They may be issued by government
agencies, insurance companies, reinsurers, special purpose corporations or other
on-shore or off-shore entities. If a trigger event causes losses exceeding a
specific amount in the geographic region and time period specified in a bond, a
Portfolio investing in the bond may lose a portion or all of its principal
invested in the bond. If no trigger event occurs, the Portfolio will recover its
principal plus interest. For some event-linked bonds, the trigger event or
losses may be based on company-wide losses, index-portfolio losses, industry
indices, or readings of scientific instruments rather than specified actual
losses. Often the event-linked bonds provide for extensions of maturity that are
mandatory, or optional at the discretion of the issuer, in order to process and
audit loss claims in those cases where a trigger event has, or possibly has,
occurred. In addition to the specified trigger events, event-linked bonds may
also expose the Portfolio to certain unanticipated risks including but not
limited to issuer (credit) default, adverse regulatory or jurisdictional
interpretations, and adverse tax consequences.

Event-linked bonds are a relatively new type of financial instrument. As
such, there is no significant trading history of these securities, and there can
be no assurance that a liquid market in these instruments will develop. See
"Illiquid Securities" below. Lack of a liquid market may impose the risk of
higher transaction costs and the possibility that a Portfolio may be forced to
liquidate positions when it would not be advantageous to do so. Event-linked
bonds are typically rated, and a Portfolio will only invest in catastrophe bonds
that meet the credit quality requirements for the Portfolio.

Illiquid Securities

The Portfolios may invest up to 15% of their net assets in illiquid
securities (10% in the case of the PIMCO Money Market Portfolio). The term
"illiquid securities" for this purpose means securities that cannot be disposed
of within seven days in the ordinary course of business at approximately the
amount at which a Portfolio has valued the securities. Illiquid securities are
considered to include, among other things, written over-the-counter options,
securities or other liquid assets being used as cover for such options,
repurchase agreements with maturities in excess of seven days, certain loan
participation interests, fixed time deposits which are not subject to prepayment
or provide for withdrawal penalties upon prepayment (other than overnight
deposits), and other securities whose disposition is restricted under the
federal securities laws (other than securities issued pursuant to Rule 144A
under the 1933 Act and certain commercial paper that the Adviser has determined
to be liquid under procedures approved by the Board of Trustees).

Illiquid securities may include privately placed securities, which are sold
directly to a small number of investors, usually institutions. Unlike public
offerings, such securities are not registered under the federal securities laws.
Although certain of these securities may be readily sold, others may be
illiquid, and their sale may involve substantial delays and additional costs.

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INVESTMENT RESTRICTIONS

Fundamental Investment Restrictions

Each Portfolio's investment objective as set forth in the Prospectus under
the heading "Description of Portfolios" for each respective Portfolio, together
with the investment restrictions set forth below, are fundamental policies of
the Portfolio and may not be changed with respect to a Portfolio without
shareholder approval by vote of a majority of the outstanding shares of that
Portfolio. Under these restrictions a Portfolio may not:

(1) invest in a security if, as a result of such investment, more than 25%
of its total assets (taken at market value at the time of such investment) would
be invested in the securities of issuers in any particular industry, except that
this restriction does not apply (a) to securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities (or repurchase agreements
with respect thereto) and (b) with respect to the Money Market Portfolio, to
securities or obligations issued by U.S. banks;

(2) with respect to 75% of its assets, invest in a security if, as a result
of such investment, more than 5% of its total assets (taken at market value at
the time of such investment) would be invested in the securities of any one
issuer, except that this restriction does not apply to securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities (This
investment restriction is not applicable to the Real Return Bond, Foreign Bond,
Global Bond, or Emerging Markets Bond Portfolios.);

(3) with respect to 75% of its assets, invest in a security if, as a result
of such investment, it would hold more than 10% (taken at the time of such
investment) of the outstanding voting securities of any one issuer (This
restriction is not applicable to the Real Return Bond, Foreign Bond, Global Bond
or the Emerging Markets Bond Portfolios.);

(4) purchase or sell real estate, although it may purchase securities
secured by real estate or interests therein, or securities issued by companies
which invest in real estate, or interests therein;

(5) purchase or sell commodities or commodities contracts or oil, gas or
mineral programs. This restriction shall not prohibit a Portfolio, subject to
restrictions described in the Prospectus and elsewhere in this Statement of
Additional Information, from purchasing, selling or entering into futures
contracts, options on futures contracts, foreign currency forward contracts,
foreign currency options, or any interest rate, securities-related or foreign
currency-related hedging instrument, including swap agreements and other
derivative instruments, subject to compliance with any applicable provisions of
the federal securities or commodities laws;

(6) borrow money, issue senior securities, or pledge, mortgage or
hypothecate its assets, except that a Portfolio may (i) borrow from banks or
enter into reverse repurchase agreements, or employ similar investment
techniques, but only if immediately after each borrowing there is asset coverage
of 300% and (ii) enter into transactions in options, futures, options on
futures, and other derivative instruments as described in the Prospectus and in
this Statement of Additional Information (the deposit of assets in escrow in
connection with the writing of covered put and call options and the purchase of
securities on a when-issued or delayed delivery basis, collateral arrangements
with respect to initial or variation margin deposits for futures contracts and
commitments entered into under swap agreements or other derivative instruments,
will not be deemed to be pledges of a Portfolio's assets);

(7) lend any funds or other assets, except that a Portfolio may, consistent
with its investment objective and policies: (a) invest in debt obligations,
including bonds, debentures, or other debt securities, bankers' acceptances and
commercial paper, even though the purchase of such obligations may be deemed to
be the making of loans, (b) enter into repurchase agreements, and (c) lend its
portfolio

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<PAGE>

securities in an amount not to exceed one-third of the value of its total
assets, provided such loans are made in accordance with applicable guidelines
established by the Securities and Exchange Commission and the Trustees of the
Trust;

(8) act as an underwriter of securities of other issuers, except to the
extent that in connection with the disposition of portfolio securities, it may
be deemed to be an underwriter under the federal securities laws.

Non-Fundamental Investment Restrictions

Each Portfolio is also subject to the following non-fundamental
restrictions and policies (which may be changed without shareholder approval)
relating to the investment of its assets and activities. Unless otherwise
indicated, a Portfolio may not:

(A) invest more than 15% of the net assets of the Portfolio (10% in the
case of the PIMCO Money Market Portfolio) (taken at market value at the time of
the investment) in "illiquid securities," which include securities subject to
legal or contractual restrictions on resale (which may include private
placements), repurchase agreements maturing in more than seven days, certain
loan participation interests, fixed time deposits which are not subject to
prepayment or provide for withdrawal penalties upon prepayment (other than
overnight deposits), certain options traded over the counter that a Portfolio
has purchased, securities or other liquid assets being used to cover such
options a Portfolio has written, securities for which market quotations are not
readily available, or other securities which legally or in the Adviser's opinion
may be deemed illiquid (other than securities issued pursuant to Rule 144A under
the Securities Act of 1933 and certain commercial paper that PIMCO has
determined to be liquid under procedures approved by the Board of Trustees);

(B) purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases and sales of portfolio securities, but it
may make margin deposits in connection with covered transactions in options,
futures, options on futures and short positions;

In addition, the Trust has adopted a non-fundamental policy pursuant to
which each Portfolio that may invest in securities denominated in foreign
currencies, except the PIMCO Global Bond and PIMCO Emerging Markets Bond
Portfolios, will hedge at least 75% of its exposure to foreign currency using
the techniques described in the Prospectus and the Statement of Additional
Information. There can be no assurance that currency hedging techniques will be
successful.

Under the 1940 Act, a "senior security" does not include any promissory
note or evidence of indebtedness where such loan is for temporary purposes only
and in an amount not exceeding 5% of the value of the total assets of the issuer
at the time the loan is made. A loan is presumed to be for temporary purposes
if it is repaid within sixty days and is not extended or renewed.
Notwithstanding the provisions of fundamental investment restriction (6) above,
a Portfolio may borrow money for temporary administrative purposes. To the
extent that borrowings for temporary administrative purposes exceed 5% of the
total assets of a Portfolio, such excess shall be subject to the 300% asset
coverage requirement of that restriction.

To the extent a Portfolio covers its commitment under a reverse repurchase
agreement (or economically similar transaction) by the maintenance of a
segregated account consisting of assets determined to be liquid in accordance
with procedures adopted by the Trustees, equal in value to the amount of the
Portfolio's commitment to repurchase, such an agreement will not be considered a
"senior security" by the Portfolio and therefore will not be subject to the 300%
asset coverage requirement otherwise applicable to borrowings by the Portfolio.

Unless otherwise indicated, all limitations applicable to Portfolio
investments (as stated above and elsewhere in this Statement of Additional
Information) apply only at the time a transaction is entered

30
<PAGE>

into. Any subsequent change in a rating assigned by any rating service to a
security (or, if unrated, deemed to be of comparable quality), or change in the
percentage of Portfolio assets invested in certain securities or other
instruments, or change in the average duration of a Portfolio's investment
portfolio, resulting from market fluctuations or other changes in a Portfolio's
total assets will not require a Portfolio to dispose of an investment until the
Adviser determines that it is practicable to sell or close out the investment
without undue market or tax consequences to the Portfolio. In the event that
ratings services assign different ratings to the same security, the Adviser will
determine which rating it believes best reflects the security's quality and risk
at that time, which may be the higher of the several assigned ratings.

MANAGEMENT OF THE TRUST

Trustees and Officers

The business affairs of the Trust and each Portfolio are managed by a Board
of Trustees. The Board retains various companies to carry out the Trust's and
the Portfolios' operations. The Board has the right to terminate these
relationships and retain a different company if it believes it is in the best
interests of the shareholders.

The Trustees and Executive Officers of the Trust, their business address
and principal occupations during the past five years are as follows (unless
otherwise indicated, the address of all persons below is 840 Newport Center
Drive, Suite 300, Newport Beach, California 92660):

<TABLE>
<CAPTION>
Position Principal Occupation(s)
Name, Address and Age with the Trust During the Past Five Years
- --------------------- -------------- --------------------------
<S> <C> <C>
Brent R. Harris* Chairman of the Board and Managing Director, PIMCO; Board of Governors,
Age 40 Trustee Investment Company Institute; Chairman and
Trustee, PIMCO Funds: Pacific Investment
Management Series; Chairman and Director,
PIMCO Commercial Mortgage Securities Trust,
Inc.

R. Wesley Burns* President and Trustee Managing Director, PIMCO; Trustee and
Age 40 President, PIMCO Funds: Pacific Investment
Management Series; Director and President,
PIMCO Commercial Mortgage Securities Trust,
Inc. Formerly Executive Vice President,
PIMCO Executive Vice President, PIMCO Funds:
Multi-Manager Series.

Guilford C. Babcock Trustee Associate Professor of Finance, University of
1575 Circle Drive Southern California; Trustee, PIMCO Funds:
San Marino, California Pacific Investment Management Series;
91108 Director, PIMCO Commercial Mortgage
Age 68 Securities Trust, Inc.; Director, Growth Fund
of America and Fundamental Investors Fund of
the Capital Group; Director, Good Hope
Medical Foundation.
</TABLE>

31
<PAGE>

<TABLE>
<CAPTION>
Position Principal Occupation(s)
Name, Address and Age with the Trust During the Past Five Years
- --------------------- -------------- --------------------------
<S> <C> <C>
Vern O. Curtis Trustee Private Investor; Trustee, PIMCO Funds:
14158 N.W. Bronson Creek Drive Pacific Investment Management Series;
Portland, Oregon Director, PIMCO Commercial Mortgage
97229 Securities Trust, Inc.; Director, Public
Age 65 Storage Business Parks, Inc., (Real Estate
Investment Trust); Director, Fresh Choice,
Inc. (restaurant company). Formerly
charitable work, The Church of Jesus Christ
of Latter Day Saints.

Thomas P. Kemp Trustee Private Investor; Trustee, PIMCO Funds:
1141 Marine Drive Pacific Investment Management Series;
Laguna Beach, California Director, PIMCO Commercial Mortgage
92651 Securities Trust, Inc. Formerly Co-Chairman,
Age 69 U.S. Committee to Assist Russian Reform;
Director, Union Financial Corp. (savings and
loan); Senior Consultant, World Cup 1994
Organizing Committee.

William J. Popejoy Trustee President, Pacific Capital Investors;
29 Chatham Court Director, PacPro (vinyl assembly products;
Newport Beach, California formerly Western Printing); Trustee, PIMCO
92660 Funds: Pacific Investment Management Series;
Age 61 Director, PIMCO Commercial Mortgage
Securities Trust, Inc. Formerly Director,
California State Lottery; Chief Executive
Officer, Orange County, California.

William H. Gross Senior Vice President Managing Director, PIMCO; Senior Vice
Age 55 President, PIMCO Funds: Pacific Investment
Management Series.

James F. Muzzy Senior Vice President Managing Director, PIMCO; Vice President,
Age 60 PIMCO Funds: Pacific Investment Management
Series.

Jeffrey M. Sargent Senior Vice President Vice President and Manager of Investment
Age 36 Operations Shareholder Services, PIMCO;
Senior Vice President, PIMCO Commercial
Mortgage Securities Trust, Inc. and PIMCO
Funds: Pacific Investment Management Series;
Vice President, PIMCO Funds: Multi-Manager
Series.
</TABLE>

32
<PAGE>

<TABLE>
<CAPTION>
Position Principal Occupation(s)
Name, Address and Age with the Trust During the Past Five Years
- --------------------- -------------- --------------------------
<S> <C> <C>
William S. Thompson, Jr. Senior Vice President Chief Executive Officer and Managing
Age 54 Director, PIMCO; Vice President, PIMCO Funds:
Pacific Investment Management Series and
PIMCO Commercial Mortgage Securities Trust,
Inc.

Steven P. Kirkbaumer Vice President Vice President, PIMCO and PIMCO Management,
Age 43 Inc. Previously associated with Prime
Advisors and Conseco Capital Management as
Director of Marketing.

Henrik Larsen Vice President Manager, Fund Administration, PIMCO; Vice
Age: 29 President, PIMCO Commercial Mortgage
Securities Trust, Inc. and PIMCO Funds:
Pacific Investment Management Series.
Formerly, Supervisor, PIMCO.

John P. Hardaway Treasurer Senior Vice President and Manager of
Age 42 Investment Operations Accounting, PIMCO;
Treasurer, PIMCO Commercial Mortgage
Securities Trust, Inc.; PIMCO Funds: Pacific
Investment Management Series; PIMCO Funds:
Multi-Manager Series. Formerly Vice
President, PIMCO.

Garlin G. Flynn Secretary Specialist, PIMCO; Secretary, PIMCO
Age 53 Commercial Mortgage Securities Trust, Inc.;
PIMCO Funds: Pacific Investment Management
Series; Assistant Secretary, PIMCO Funds:
Multi-Manager Series. Formerly Senior
Portfolio Administrator, PIMCO; Senior
Mutual Fund Analyst, PIMCO Advisors
Institutional Services.

Joseph D. Hattesohl Assistant Treasurer Vice President and Manager of Financial
Age 35 Reporting and Taxation, PIMCO. Assistant
Treasurer, PIMCO Commercial Mortgage
Securities Trust, Inc., PIMCO Funds: Pacific
Investment Management Series, and PIMCO
Funds: Multi-Manager Series. Formerly
Manager of Fund Taxation, PIMCO; Director of
Financial Reporting, Carl I. Brown & Co.

Michael J. Willemsen Assistant Secretary Manager, PIMCO; Assistant Secretary, PIMCO
Age 39 Commercial Mortgage Securities Trust, Inc.
and PIMCO Funds: Pacific Investment
Management Series. Formerly Project Lead,
PIMCO.
</TABLE>

33
<PAGE>

___________________
*Mr. Harris and Mr. Burns are "interested persons" of the Trust (as that
term is defined in the 1940 Act) because of their affiliations with PIMCO.

Compensation Table

For the fiscal year ending December 31, 1999, the Trust paid the following
compensation to the Trustees of the Trust:

Aggregate Total Compensation from
Compensation Trust and Fund Complex
Name and Position from Trust/1/ Paid to Trustees/2/
- --------------------------- ------------- -----------------------
<S> <C> <C>

Guilford C. Babcock $10,250 $78,750
Trustee

Vern O. Curtis $11,036 $81,619
Trustee

Thomas P. Kemp $10,250 $78,750
Trustee

William J. Popejoy $10,250 $78,750
Trustee
</TABLE>
____________________

/1/Each Trustee, other than those affiliated with the Adviser or its
affiliates will receive an annual retainer of $4,000 plus $1,500 for each Board
of Trustees meeting attended in person and $250 for each meeting attended
telephonically, plus reimbursement of related expenses. In addition, a Trustee
serving as a Committee Chair, other than those affiliated with the Adviser or
its affiliates, will receive an additional annual retainer of $500.

/2/Each Trustee also serves as a Director of PIMCO Commercial Mortgage
Securities Trust, Inc., a registered closed-end management investment company,
and as a Trustee of PIMCO Funds: Pacific Investment Management Series, a
registered open-end management investment company. For their services to PIMCO
Commercial Mortgage Securities Trust, Inc., each Director who is unaffiliated
with the Adviser or its affiliates receives an annual retainer of $6,000 plus
$1,000 for each Board of Directors meeting attended and $500 for each Board of
Directors meeting attended telephonically. Each Trustee serving as a Committee
Chair, other than those affiliated with the Adviser or its affiliates, receives
an annual retainer of $500. For their services to PIMCO Funds: Pacific
Investment Management Series, each Trustee, other than those affiliated with the
Adviser or its affiliates, receives an annual retainer of $45,000 plus $3,000
for each Board of Trustees meeting attended in person and $500 for each meeting
attended telephonically, plus reimbursement of related expenses. In addition, a
Trustee serving as a Committee Chair, other than those affiliated with the
Adviser or its affiliates, receives an additional annual retainer of $1,500.

Investment Adviser

PIMCO serves as investment adviser to the Portfolios pursuant to an
investment advisory contract ("PIMCO Advisory Contract") between PIMCO and the
Trust. PIMCO is a subsidiary partnership of PIMCO Advisors. The general partners
of PIMCO Advisors are PIMCO Partners, G.P. and PIMCO Advisors Holdings L.P.
("PAH"). PIMCO Partners, G.P. is a general partnership between PIMCO Holding
LLC, a Delaware limited liability company and an indirect wholly-owned
subsidiary of Pacific Life Insurance Company ("Pacific Life"), and PIMCO
Partners LLC, a California limited liability

34
<PAGE>

company controlled by the current Managing Directors and two former Managing
Directors of PIMCO. PIMCO Partners, G.P. is the sole general partner of PAH.

PIMCO is responsible for making investment decisions and placing orders for
the purchase and sale of the Portfolios' investments directly with the issuers
or with brokers or dealers selected by it in its discretion. See "Portfolio
Transactions and Brokerage" below. PIMCO also furnishes to the Board of
Trustees, which has overall responsibility for the business and affairs of the
Trust, periodic reports on the investment performance of each Portfolio.

On October 31, 1999, PIMCO Advisors, PAH Partners G.P., certain of their
affiliates, and Allianz of America, Inc.("Allianz of America"), and certain
other parties named therein entered into an Implementation and Merger Agreement
pursuant to which Allianz of America will acquire majority ownership of PIMCO
Advisors and its subsidiaries, including PIMCO (the "Transaction"). Under the
terms of the Transaction, Allianz will acquire for cash approximately 70% of the
outstanding partnership interests in PIMCO Advisors, while the remainder will
continue to be owned indirectly by Pacific Life. The Transaction is currently
expected to be completed by the end of the first quarter of 2000.

Allianz AG, the parent of Allianz of America, is a publicly traded German
company which, together with its subsidiaries, comprises the world's second
largest insurance company as measured by premium income. Allianz AG is a leading
provider of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. The Allianz group currently has assets under
management of more than $390 billion, and in its last fiscal year wrote
approximately $50 billion in gross insurance premiums. After completion of the
Transaction, PIMCO and the Allianz group combined have over $650 billion in
assets under management.

Significant shareholders of Allianz AG currently include Dresdner Bank AG,
Deutsche Bank AG, Munich Reinsurance, and HypoVereinsbank. Following completion
of the Transaction, Dresdner Bank AG and Deutsche Bank AG, as well as certain
broker-dealers that might be deemed to be affiliated with these entities, such
as Bankers Trust Company, BT Alex Brown, Inc., Reinsurance, Deutsche Bank
Securities, Inc. and Dresdner Kleinwort Benson North America LLC (collectively,
the "Affiliated Brokers"), may be considered to be affiliated persons of PIMCO .
Once the Transaction is completed, absent an SEC exemption or other relief, the
Portfolios would generally be precluded from effecting principal transactions
with the Affiliated Brokers, and their ability to purchase securities being
underwritten by an Affiliated Broker or to utilize the Affiliated Brokers for
agency transactions would be subject to restrictions. PIMCO does not believe its
the restrictions on transactions with the Affiliated Brokers described above
will materially adversely affect their ability, post-closing, to provide
services to the Portfolios, the Portfolios' ability to take advantage of market
opportunities, or the Portfolios' overall performance.

The consummation of the Allianz Transaction is subject to the approval of
the public unit holders of PAH, as well as to certain regulatory and client
approvals, including the approval of the Board of Trustees of the Trust and the
approval of the shareholders of the Funds, and other conditions customary to
transactions of this kind.

This Statement of Additional Information will be supplemented or revised if
the Allianz Transaction does not occur substantially as set forth above.

Under the terms of the Advisory Contract, PIMCO is obligated to manage the
Portfolios in accordance with applicable laws and regulations. The investment
advisory services of PIMCO to the Trust are not exclusive under the terms of the
Advisory Contract. PIMCO is free to, and do, render

35
<PAGE>

investment advisory services to others. The Advisory Contract was approved by
the Board of Trustees, including a majority of the Trustees who are not parties
to the Advisory Contract or interested persons of such parties ("Independent
Trustees"), at a meeting held on August 26, 1997, as supplemented on May 26,
1998 and February 23, 1999, and was approved by the shareholders of all then-
operational Portfolios on December 31, 1997.

Following the expiration of the two year period commencing with the
effectiveness of the Advisory Contract, it will continue in effect on a yearly
basis provided such continuance is approved annually (i) by the holders of a
majority of the outstanding voting securities of the Trust or by the Board of
Trustees and (ii) by a majority of the Independent Trustees. The Advisory
Contract may be terminated without penalty by vote of the Trustees or the
shareholders of the Trust, or by PIMCO, on 60 days' written notice by either
party to the contract and will terminate automatically if assigned.

Each Portfolio currently pays a monthly investment advisory fee at an
annual rate based on average daily net assets of the Portfolios as follows:

Advisory
Portfolio Fee Rate
- --------- ---------
<S> <C>
Money Market Portfolio........................................... 0.15%
Strategic Balanced and StocksPLUS Growth and Income Portfolios... 0.40
Emerging Markets Bond Portfolio.................................. 0.45
All other Portfolios............................................. 0.25

</TABLE>

The advisory fees paid by each Portfolio that was operational during the
fiscal year ended December 31, 1999 was:

Portfolio Advisory Fee
- --------- ------------
<S> <C>
Money Marked Portfolio $ 2,444
Short-Term Bond Portfolio $ 2,715
Low Duration Bond Portfolio $ 17,747
Real Return Bond Portfolio $ 3,091
Total Return Bond II Portfolio $ 12,153
Total Return Bond Portfolio $ 12,917
High Yield Bond Portfolio $520,523
Long-Term U.S. Government Bond $ 17,655
Foreign Bond $ 26,461
StocksPLUS Growth and Income Portfolio $563,001
</TABLE>

Administrator

PIMCO also serves as Administrator to the Portfolios pursuant to an
administration agreement dated December 31, 1997 (the "Administration
Agreement") which was approved by the Board of Trustees, including all of the
Independent Trustees, at a meeting held on August 26, 1997, as supplemented on
May 26, 1998 and February 23, 1999. PIMCO provides the Portfolios with certain
administrative and shareholder services necessary for Portfolio operations and
is responsible for the supervision of other Portfolio service providers. PIMCO
may in turn use the facilities or assistance of its affiliates to provide
certain services under the Administration Agreement, on terms agreed between
PIMCO and such affiliates. The administrative services provided by PIMCO include
but are not limited to: (1) shareholder servicing functions, including
preparation of reports and communications to shareholders and other appropriate
parties, (2) regulatory compliance, such as reports and filings with the SEC and
state securities commissions, and (3) general supervision of the operations of
the Portfolios, including coordination of the services performed by the
Portfolios' transfer agent, custodian, legal counsel, independent accountants,
and others. PIMCO (or an affiliate of PIMCO) also furnishes the

36
<PAGE>

Portfolios with office space facilities required for conducting the business of
the Portfolios, and pays the compensation of those officers, employees and
Trustees of the Trust affiliated with PIMCO. In addition, PIMCO, at its own
expense, arranges for the provision of legal, audit, custody, transfer agency
and other services for the Portfolios, and is responsible for the costs of
registration of the Trust's shares and the printing of prospectuses and reports
for current shareholders and other appropriate parties.

PIMCO has contractually agreed to provide the foregoing services, and to
bear these expenses, at the following rates for each Portfolio (each expressed
as a percentage of the Portfolio's average daily net assets attributable to its
classes of shares on an annual basis):

Administrative
Portfolio Fee Rate
- --------- --------------
<S> <C>
StocksPLUS Growth and Income Portfolio............................. 0.10%
Money Market, Short-Term Bond, and Strategic Balanced Portfolios... 0.20
High Yield Bond Portfolio.......................................... 0.35
Emerging Markets Bond Portfolio.................................... 0.40
Global Bond and Foreign Bond Portfolios............................ 0.50
All Other Portfolios............................................... 0.25
</TABLE>

Except for the expenses paid by PIMCO, the Trust bears all costs of its
operations. The Portfolios are responsible for: (i) salaries and other
compensation of any of the Trust's executive officers and employees who are not
officers, directors, stockholders, or employees of PIMCO or its subsidiaries or
affiliates; (ii) taxes and governmental fees; (iii) brokerage fees and
commissions and other portfolio transaction expenses; (iv) costs of borrowing
money, including interest expenses; (v) fees and expenses of the Trustees who
are not "interested persons" of PIMCO or the Trust, and any counsel retained
exclusively for their benefit; (vi) extraordinary expenses, including costs of
litigation and indemnification expenses; and (vii) expenses, such as
organizational expenses, which are capitalized in accordance with generally
accepted accounting principles.

The Administration Agreement may be terminated by the Trustees, or by a
vote of the outstanding voting securities of the Trust or Portfolio, as
applicable, at any time on 60 days' written notice. Following the expiration of
the two year period commencing with the effectiveness of the Administration
Agreement, it may be terminated by PIMCO on 60 days' written notice. Following
its initial two-year term, the agreement will continue from year to year if
approved by the Trustees, including a majority of the Trust's Independent
Trustees (as that term is defined in the 1940 Act).

The administrative fees paid by each Portfolio that was operational during
the fiscal year ended December 31, 1999 was:

<TABLE>
<CAPTION>
Portfolio Administrative Fee
- --------- ------------------
<S> <C>
Money Market Portfolio $ 1,629
Short-Term Bond Portfolio $ 1,939
Low Duration Bond Portfolio $11,902
Real Return Bond Portfolio $ 1,932
Total Return Bond Portfolio $ 7,711
Total Return Bond II Portfolio $ 7,596
High Yield Bond Portfolio $49,512
Long-Term U.S. Government Bond Portfolio $11,034
Foreign Bond Portfolio $13,231
StocksPLUS Growth and Income Portfolio $35,665
</TABLE>

PIMCO has entered into an expense limitation agreement with the Trust,
pursuant to which PIMCO has agreed to waive or reduce its administrative fee so
that the total annual Portfolio operating expenses of each Portfolio do not
exceed, due to organizational expenses and/or the payment of the Portfolio's pro
rata share of the Trust's Trustees' fees, the total portfolio operating

37
<PAGE>

expenses specified for that Portfolio in the table identifying the Portfolio's
annual portfolio operating expenses in the Portfolio's then-current prospectus,
plus 0.49 basis points. Each Portfolio will at a later date reimburse PIMCO for
administrative fees waived by PIMCO during the previous 36 months, but only if,
after such reimbursement, the Portfolio's expense ratio does not exceed the
percentage described above. The agreement has a current term through December
31, 2000, and will automatically renew for one-year terms unless PIMCO provides
written notice to the Trust at least 30 days prior to the end of the then-
current term. In addition, the agreement will terminate upon termination of the
Administration Agreement, or may be terminated by the Trust, without payment of
any penalty, upon ninety (90) days' prior written notice to PIMCO.

DISTRIBUTION OF TRUST SHARES

Distributor and Multi-Class Plan

PIMCO Funds Distributors LLC (the "Distributor") serves as the distributor
of the Trust's shares pursuant to a distribution contract ("Distribution
Contract") with the Trust which is subject to annual approval by the Board. The
Distributor is a wholly owned subsidiary of PIMCO Advisors. The Distribution
Contract is terminable with respect to a Portfolio or class without penalty, at
any time, by the Portfolio or class by not more than 60 days' nor less than 30
days' written notice to the Distributor, or by the Distributor upon not more
than 60 days' nor less than 30 days' written notice to the Trust. The
Distributor is not obligated to sell any specific amount of Trust shares.

The Distribution Contract will continue in effect with respect to each
Portfolio for successive one-year periods, provided that each such continuance
is specifically approved (i) by the vote of a majority of the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the Distribution Contract; and (ii) by
the vote of a majority of the entire Board of Trustees cast in person at a
meeting called for that purpose. If the Distribution Contract is terminated (or
not renewed) with respect to one or more Portfolios, it may continue in effect
with respect to any Portfolio as to which it has not been terminated (or has
been renewed).

The Trust offers two classes of shares: the Institutional Class and the
Administrative Class. Institutional Class shares are offered primarily for
direct investment by investors such as pension and profit sharing plans,
employee benefit trusts, endowments, foundations, corporations and high net
worth individuals. (Institutional Class shares may also be offered through
certain financial intermediaries that charge their customers transaction or
other fees with respect to the customer's investment in the Portfolio.)
Administrative Class shares are offered primarily through employee benefit plans
alliances, broker-dealers, and other intermediaries, and each Portfolio pays
service or distribution fees to such entities for services they provide to
Administrative Class shareholders.

The Trust has adopted an Amended and Restated Multi-Class Plan ("Multi-
Class Plan") pursuant to Rule 18f-3 under the 1940 Act. Under the Multi-Class
Plan, shares of each class of each Portfolio represent an equal pro rata
interest in such Portfolio and, generally, have identical voting, dividend,
liquidation, and other rights, preferences, powers, restrictions, limitations,
qualifications and terms and conditions, except that: (a) each class has a
different designation; (b) each class of shares bears any class-specific
expenses allocated to it; and (c) each class has exclusive voting rights on any
matter submitted to shareholders that relates solely to its distribution or
service arrangements, and each class has separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class.

Each class of shares bears any class specific expenses allocated to such
class, such as expenses related to the distribution and/or shareholder servicing
of such class. In addition, each class may, at the

38
<PAGE>

Trustees' discretion, also pay a different share of other expenses, not
including advisory or custodial fees or other expenses related to the management
of the Trust's assets, if these expenses are actually incurred in a different
amount by that class, or if the class receives services of a different kind or
to a different degree than the other classes. All other expenses are allocated
to each class on the basis of the net asset value of that class in relation to
the net asset value of the particular Portfolio. In addition, each class may
have a differing sales charge structure, and differing exchange and conversion
features.

Administrative Services Plan for Administrative Class Shares

The Trust has adopted an Administrative Services Plan (the "Administrative
Plan") with respect to the Administrative Class shares of each Portfolio.

Under the terms of the Administrative Plan, the Trust is permitted to
reimburse, out of the assets attributable to the Administrative Class shares of
each Portfolio, in an amount up to 0.15% on an annual basis of the average daily
net assets of that class, financial intermediaries that provide certain
administrative services for Administrative Class shareholders. Such services
may include, but are not limited to, the following functions: receiving,
aggregating and processing shareholder orders; furnishing shareholder sub-
accounting; providing and maintaining elective shareholder services such as
check writing and wire transfer services; providing and maintaining pre-
authorized investment plans; communicating periodically with shareholders;
acting as the sole shareholder of record and nominee for shareholders;
maintaining accounting records for shareholders; answering questions and
handling correspondence from shareholders about their accounts; and performing
similar account administrative services.

Fees paid pursuant to the Administrative Plan may be paid for shareholder
services and the maintenance of shareholder accounts, and therefore may
constitute "service fees" for purposes of applicable rules of the National
Association of Securities Dealers, Inc.

Each Administrative Plan provides that it may not be amended to materially
increase the costs which Administrative Class shareholders may bear under the
Plan without the approval of a majority of the outstanding voting securities of
the Administrative Class, and by vote of a majority of both (i) the Trustees of
the Trust and (ii) those Trustees who are not "interested persons" of the Trust
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of the Plan or any agreements related to it (the "Plan
Trustees"), cast in person at a meeting called for the purpose of voting on the
Plan and any related amendments.

The Administrative Plan also provides that it may not take effect until
approved by vote of a majority of both (i) the Trustees of the Trust and (ii)
the disinterested Trustees defined above. In addition, the Administrative Plan
further provides that it shall continue in effect so long as such continuance is
specifically approved at least annually by the Trustees and the disinterested
Trustees defined above. The Administrative Plan provides that any person
authorized to direct the disposition of monies paid or payable by a class
pursuant to the Plan or any related agreement shall provide to the Trustees, and
the Board shall review at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.

The Administrative Plan is a "reimbursement plan," which means that fees
are payable to the relevant financial intermediary only to the extent necessary
to reimburse expenses incurred pursuant to such plan. The Administrative Plan
further provides that expenses payable under the Plan may be carried forward for
reimbursement for up to twelve months beyond the date in which the expense is
incurred, subject to the limit that not more that 0.15% of the average daily net
assets of Administrative Class shares may be used in any month to pay expenses
under the Plan.

Institutional and Administrative Class shares of the Trust may also be
offered through certain brokers and financial intermediaries ("service agents")
that have established a shareholder servicing relationship with the Trust on
behalf of their customers. The Trust pays no compensation to such entities

39
<PAGE>

other than service fees paid with respect to Administrative Class shares.
Service agents may impose additional or different conditions than the Trust on
the purchase, redemption or exchanges of Trust shares by their customers.
Service agents may also independently establish and charge their customers
transaction fees, account fees and other amounts in connection which purchases,
sales and redemption of Trust shares in addition to any fees charged by the
Trust. Each service agent is responsible for transmitting to its customers a
schedule of any such fees and information regarding any additional or different
conditions regarding purchases and redemptions. Shareholders who are customers
of service agents should consult their service agents for information regarding
these fees and conditions.

Purchases and Redemptions

Variable Contract Owners do not deal directly with the Portfolios to
purchase, redeem, or exchange shares, and Variable Contract Owners should refer
to the prospectus for the applicable Separate Account for information on the
allocation of premiums and on transfers of accumulated value among sub-accounts
of the Separate Accounts that invest in the Portfolios.

Shares of a Portfolio may not be offered or sold in any state unless
qualified in that jurisdiction, unless an exemption from qualification is
available.

A shareholder may exchange Institutional and Administrative Class shares of
any Portfolio for Institutional and Administrative Class shares of any other
Portfolio of the Trust on the basis of their respective net asset values.
Orders for exchanges accepted prior to the close of regular trading on the New
York Stock Exchange (the "Exchange") on any day the Trust is open for business
will be executed at the respective net asset values determined as of the close
of business that day.

The Trust reserves the right to suspend or postpone redemptions during any
period when: (a) trading on the Exchange is restricted, as determined by the
SEC, or that Exchange is closed for other than customary weekend and holiday
closings; (b) the SEC has by order permitted such suspension; or (c) an
emergency, as determined by the SEC, exists, making disposal of portfolio
securities or valuation of net assets of the Portfolio not reasonably
practicable.

Although the Trust will normally redeem all shares for cash, it may, in
unusual circumstances, redeem by payment in kind of securities held in the
Portfolios.

PORTFOLIO TRANSACTIONS AND BROKERAGE

Investment Decisions

Investment decisions for the Trust and for the other investment advisory
clients of the Advisers are made with a view to achieving their respective
investment objectives. Investment decisions are the product of many factors in
addition to basic suitability for the particular client involved (including the
Trust). Thus, a particular security may be bought or sold for certain clients
even though it could have been bought or sold for other clients at the same
time. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling the security. In some instances, one
client may sell a particular security to another client. It also sometimes
happens that two or more clients simultaneously purchase or sell the same
security, in which event each day's transactions in such security are, insofar
as possible, averaged as to price and allocated between such clients in a manner
which in the Adviser's opinion is equitable to each and in accordance with the
amount being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients.

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Brokerage and Research Services

There is generally no stated commission in the case of fixed income
securities, which are traded in the over-the-counter markets, but the price paid
by the Trust usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Trust includes a disclosed, fixed
commission or discount retained by the underwriter or dealer. Transactions on
U.S. stock exchanges and other agency transactions involve the payment by the
Trust of negotiated brokerage commissions. Such commissions vary among
different brokers. Also, a particular broker may charge different commissions
according to such factors as the difficulty and size of the transaction.
Transactions in foreign securities generally involve the payment of fixed
brokerage commissions, which are generally higher than those in the United
States.

The PIMCO places all orders for the purchase and sale of portfolio
securities, options and futures contracts for the relevant Portfolio and buys
and sells such securities, options and futures for the Trust through a
substantial number of brokers and dealers. In so doing, the PIMCO use its best
efforts to obtain for the Trust the most favorable price and execution
available, except to the extent it may be permitted to pay higher brokerage
commissions as described below. In seeking the most favorable price and
execution, PIMCO, having in mind the Trust's best interests, considers all
factors it deems relevant, including, by way of illustration, price, the size of
the transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the broker-dealer
involved and the quality of service rendered by the broker-dealer in other
transactions.

It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive research services from broker-dealers which execute portfolio
transactions for the clients of such advisers. Consistent with this practice,
PIMCO receives research services from many broker-dealers with which PIMCO
places the Trust's portfolio transactions. These services, which in some cases
may also be purchased for cash, include such matters as general economic and
security market reviews, industry and company reviews, evaluations of securities
and recommendations as to the purchase and sale of securities. Some of these
services are of value to PIMCO in advising various of its clients (including the
Trust), although not all of these services are necessarily useful and of value
in managing the Trust. The management fee paid by the Trust is not reduced
because PIMCO receives such services.

As permitted by Section 28(e) of the Securities Exchange Act of 1934, PIMCO
may cause the Trust to pay a broker-dealer which provides "brokerage and
research services" (as defined in the Act) to PIMCO an amount of disclosed
commission for effecting a securities transaction for the Trust in excess of the
commission which another broker-dealer would have charged for effecting that
transaction.

Consistent with the Rules of the NASD and subject to seeking the most
favorable price and execution available and such other policies as the Trustees
may determine, PIMCO may also consider sales of shares of the Trust as a factor
in the selection of broker-dealers to execute portfolio transactions for the
Trust, which may result in the payment of an amount of disclosed commission for
effecting a securities transaction for the Trust in excess of the commission
which another broker-dealer would have charged for effecting that transaction.

PIMCO may place orders for the purchase and sale of exchange-listed
portfolio securities with a broker-dealer that is an affiliate of PIMCO where,
in the judgment of PIMCO, such firm will be able to obtain a price and execution
at least as favorable as other qualified broker-dealers.

Pursuant to rules of the SEC, a broker-dealer that is an affiliate of PIMCO
may receive and retain compensation for effecting portfolio transactions for a
Portfolio on a national

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securities exchange of which the broker-dealer is a member if the transaction is
"executed" on the floor of the exchange by another broker which is not an
"associated person" of the affiliated broker-dealer, and if there is in effect a
written contract between PIMCO and the Trust expressly permitting the affiliated
broker-dealer to receive and retain such compensation.

SEC rules further require that commissions paid to such an affiliated
broker-dealer, or PIMCO by a Portfolio on exchange transactions not exceed
"usual and customary brokerage commissions." The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time."

Portfolio Turnover

PIMCO manages the Portfolios without regard generally to restrictions on
portfolio turnover. See "Taxation" below. The use of certain derivative
instruments with relatively short maturities may tend to exaggerate the
portfolio turnover rate for some of the Portfolios. Trading in fixed income
securities does not generally involve the payment of brokerage commissions, but
does involve indirect transaction costs. The use of futures contracts may
involve the payment of commissions to futures commission merchants. A Portfolio
with a higher rate of portfolio turnover will generally incur higher transaction
costs. The portfolio turnover rate for each of the following Portfolios
generally is not expected to exceed the indicated rate: PIMCO Short-Term Bond
Portfolio - 100%; PIMCO Low Duration Bond Portfolio - 250%; PIMCO Real Return
Bond Portfolio - 1,000%; PIMCO High Yield Bond Portfolio - 75%; PIMCO Total
Return Bond Portfolio - 175%; Total Return Bond Portfolio II - 175%; PIMCO Long-
Term U.S. Government Bond Portfolio - 500%; PIMCO Foreign Bond Portfolio -
1,000%; PIMCO Global Bond Portfolio - 1,000%; PIMCO Emerging Markets Bond
Portfolio - 1,000%; PIMCO Strategic Balanced Portfolio - 100%; and PIMCO
StocksPLUS Growth and Income Portfolio - 100%.

The portfolio turnover rate of a Portfolio is calculated by dividing (a)
the lesser of purchases or sales of portfolio securities for the particular
fiscal year by (b) the monthly average of the value of the portfolio securities
owned by the Portfolio during the particular fiscal year. In calculating the
rate of portfolio turnover, there is excluded from both (a) and (b) all
securities, including options, whose maturities or expiration dates at the time
of acquisition were one year or less. Proceeds from short sales and assets used
to cover short positions undertaken are included in the amounts of securities
sold and purchased, respectively, during the year.

NET ASSET VALUE

The net asset value of a Portfolios' Institutional and Administrative Class
shares is determined once on each day as of 4:00 p.m. Eastern time, or as of
such other time designated by the New York Stock Exchange (the "Exchange") as
the close of trading for that day ("closing"). Net asset value will not be
determined on any day on which the Exchange is closed. The Exchange is closed
on the following holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. The net asset value of a Portfolios'
Institutional and Administrative Class shares is determined by dividing the
total value of a Portfolio's investments and other assets attributable to that
class less any liabilities, by the total number of shares outstanding of that
class.

In determining net asset values, the Portfolios use price data received
shortly after 4:00 p.m. Eastern time believed to reflect the current market
value of the securities held by the Portfolios as of the

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closing of the Exchange. The Portfolios intend to use these prices regardless of
the impact of any post-closing adjustments to securities prices, as long as, in
the view of the Portfolios, such prices represent the current market value of
the securities as of the time selected by the Portfolios for the calculation of
net asset value. Portfolios that invest in securities traded in foreign
securities markets may trade such securities on days when the Exchange is not
open, and the net asset value of a Portfolios Institutional and Administrative
Class shares may be affected significantly on days when investors do not have
access to the Portfolios.

For all Portfolios other than the PIMCO Money Market Portfolio, portfolio
securities and other assets for which market quotations are readily available
are stated at market value. Market value is determined on the basis of last
reported sales prices, or if no sales are reported, as is the case for most
securities traded over-the- counter, at the mean between representative bid and
asked quotations obtained from a quotation reporting system or from established
market makers. Fixed income securities, including those to be purchased under
firm commitment agreements (other than obligations having a maturity of 60 days
or less), are normally valued on the basis of quotations obtained from brokers
and dealers or pricing services, which take into account appropriate factors
such as institutional-sized trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics, and
other market data.

Quotations of foreign securities in foreign currency are converted to U.S.
dollar equivalents using foreign exchange quotations received from independent
dealers. Short-term investments having a maturity of 60 days or less are valued
at amortized cost, when the Board of Trustees determines that amortized cost is
their fair value. Certain fixed income securities for which daily market
quotations are not readily available may be valued, pursuant to guidelines
established by the Board of Trustees, with reference to fixed income securities
whose prices are more readily obtainable and whose durations are comparable to
the securities being valued. Subject to the foregoing, other securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by the Board of Trustees.

The PIMCO Money Market Portfolio's securities are valued using the
amortized cost method of valuation. This involves valuing a security at cost on
the date of acquisition and thereafter assuming a constant accretion of a
discount or amortization of a premium to maturity, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Portfolio would receive if it sold the instrument. During such periods the
yield to investors in the Portfolio may differ somewhat from that obtained in a
similar investment company which uses available market quotations to value all
of its portfolio securities.

The SEC's regulations require the PIMCO Money Market Portfolio to adhere to
certain conditions. The Trustees, as part of their responsibility within the
overall duty of care owed to the shareholders, are required to establish
procedures reasonably designed, taking into account current market conditions
and the Portfolio's investment objective, to stabilize the net asset value per
share as computed for the purpose of distribution and redemption at $1.00 per
share. The Trustees' procedures include a requirement to periodically monitor,
as appropriate and at such intervals as are reasonable in light of current
market conditions, the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of market
value. The Trustees will consider what steps should be taken, if any, in the
event of a difference of more than 1/2 of 1% between the two. The Trustees will
take such steps as they consider appropriate, (e.g., selling securities to
shorten the average portfolio maturity) to minimize any material dilution or
other unfair results which might arise from differences between the two. The
Portfolio also is required to maintain a dollar-weighted average portfolio
maturity of 90 days or less, to limit its investments to instruments having
remaining maturities of 397 days or less (except securities held subject to
repurchase agreements having 397 days or less maturity) and to invest only in
securities determined by the Adviser under procedures established by the Board
of Trustees to be of high quality with minimal credit risks.

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Each Portfolio's liabilities are allocated among its classes. The total of
such liabilities allocated to a class plus that class's servicing fees and any
other expenses specially allocated to that class are then deducted from the
class's proportionate interest in the Portfolio's assets, and the resulting
amount for each class is divided by the number of shares of that class
outstanding to produce the class's "net asset value" per share. Generally, for
Portfolios that pay income dividends, those dividends are expected to differ
over time by approximately the amount of the expense accrual differential
between a particular Portfolio's classes.

TAXATION

The following discussion is general in nature and should not be regarded as
an exhaustive presentation of all possible tax ramifications. All shareholders
should consult a qualified tax adviser regarding their investment in a
Portfolio.

Each Portfolio intends to qualify annually and elect to be treated as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). To qualify as a regulated investment company, each Portfolio
generally must, among other things, (a) derive in each taxable year at least 90%
of its gross income from dividends, interest, payments with respect to
securities loans, and gains from the sale or other disposition of stock,
securities or foreign currencies, or other income derived with respect to its
business of investing in such stock, securities or currencies ("Qualifying
Income Test"); (b) diversify its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of the Portfolio's assets
is represented by cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
of any one issuer limited for the purposes of this calculation to an amount not
greater than 5% of the value of the Portfolio's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities or the securities of other regulated investment
companies); and (c) distribute at least 90% of its investment company taxable
income (which includes dividends, interest and net short-term capital gains in
excess of any net long-term capital losses) each taxable year. The Treasury
Department is authorized to promulgate regulations under which gains from
foreign currencies (and options, futures, and forward contracts on foreign
currency) would constitute qualifying income for purposes of the Qualifying
Income Test only if such gains are directly relating to investing in securities.
To date, such regulations have not been issued.

As a regulated investment company, a Portfolio generally will not be
subject to U.S. federal income tax on its investment company taxable income and
net capital gains (any net long-term capital gains in excess of the sum of net
short-term capital losses and capital loss carryovers from prior years)
designated by the Portfolio as capital gain dividends, if any, that it
distributes to shareholders on a timely basis. Each Portfolio intends to
distribute to its shareholders, at least annually, substantially all of its
investment company taxable income and any net capital gains. In addition,
amounts not distributed by a Portfolio on a timely basis in accordance with a
calendar year distribution requirement are subject to a nondeductible 4% excise
tax. To avoid the tax, a Portfolio must distribute during each calendar year an
amount equal to the sum of (1) at least 98% of its ordinary income (not taking
into account any capital gains or losses) for the calendar year, (2) at least
98% of its capital gains in excess of its capital losses (and adjusted for
certain ordinary losses) for the twelve month period ending on October 31 of the
calendar year, and (3) all ordinary income and capital gains for previous years
that were not distributed during such years. A distribution will be treated as
paid on December 31 of the calendar year if it is declared by a Portfolio in
October, November, or December of that year to shareholders of record on a date
in such a month and paid by the Portfolio during January of the following year.
Such distributions will be taxable to shareholders (other than those not subject
to federal income tax) in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
To avoid application of the excise tax, each Portfolio intends to make its
distributions in accordance with the calendar year distribution requirement.

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To comply with regulations under section 817(h) of the Code, each Portfolio
is required to diversify its investments. Generally, a Portfolio will be
required to diversify its investments so that on the last day of each quarter of
a calendar year no more than 55% of the value of its total assets is represented
by any one investment, no more than 70% is represented by any two investments,
no more than 80% is represented by any three investments, and no more than 90%
is represented by any four investments. For this purpose, securities of a given
issuer generally are treated as one investment, but each U.S. Government agency
and instrumentality is treated as a separate issuer. Any security issued,
guaranteed, or insured (to the extent so guaranteed or insured) by the U.S. or
an agency or instrumentality of the U.S. is treated as a security issued by the
U.S. Government or its agency or instrumentality, whichever is applicable.

The Treasury Department announced that it would issue future regulations or
rulings addressing the circumstances in which a variable contract owner's
control of the investments of the separate account may cause the contract owner,
rather than the insurance company, to be treated as the owner of the assets held
by the separate account. If the contract owner is considered the owner of the
securities underlying the separate account, income and gains produced by those
securities would be included currently in the contract owner's gross income. It
is not known what standards will be set forth in the regulations or rulings.

In the event that rules or regulations are adopted, there can be no
assurance that the Portfolios will be able to operate as currently described, or
that the Trust will not have to change one or more Portfolio's investment
objective or investment policies. While each Portfolio's investment objective
is fundamental and may be changed only by a vote of a majority of its
outstanding shares, the investment policies of a Portfolio may be modified as
necessary to prevent any such prospective rules and regulations from causing
Variable Contract Owners to be considered the owners of the shares of a
Portfolio underlying the Separate Accounts.

Distributions

Dividends paid out of a Portfolio's investment company taxable income will
be treated as ordinary income for tax purposes in the hands of a U.S.
shareholder (such as a Separate Account). Distributions received by tax-exempt
shareholders will not be subject to federal income tax to the extent permitted
under applicable tax law.

A portion of the dividends paid by the PIMCO StocksPLUS Growth and Income
Portfolio may qualify for the deduction for dividends received by corporations.
Dividends paid by the other Portfolios generally are not expected to qualify for
the deduction for dividends received by corporations, although certain
distributions from the PIMCO High Yield Bond Portfolio may qualify.
Distributions of net capital gains, if any, designated as capital gain
dividends, are taxable as long-term capital gains, regardless of how long the
shareholder has held a Portfolio's shares and are not eligible for the dividends
received deduction. Any distributions that are not from a Portfolio's investment
company taxable income or net realized capital gains may be characterized as a
return of capital to shareholders or, in some cases, as capital gain.

Sales of Shares

Upon the disposition of shares of a Portfolio (whether by redemption, sale
or exchange), a shareholder (such as a Separate Account) will realize a gain or
loss. Such gain or loss will be capital gain or loss if the shares are capital
assets in the shareholder's hands, and will be long-term or short-term generally
depending upon the shareholder's holding period for the shares. Any loss
realized on a disposition will be disallowed to the extent the shares disposed
of are replaced within a period of 61 days beginning 30 days before and ending
30 days after the shares are disposed of. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on a disposition of shares held by the shareholder for
six months or less will be treated as a long-term capital

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loss to the extent of any distributions of capital gain dividends received by
the shareholder with respect to such shares.

Options, Futures and Forward Contracts, and Swap Agreements

Some of the options, futures contracts, forward contracts, and swap
agreements used by the Portfolios may be "section 1256 contracts." Any gains or
losses on section 1256 contracts are generally considered 60% long-term and 40%
short-term capital gains or losses ("60/40") although certain foreign currency
gains and losses from such contracts may be treated as ordinary in character.
Also, section 1256 contracts held by a Portfolio at the end of each taxable year
(and, for purposes of the 4% excise tax, on certain other dates as prescribed
under the Code) are "marked to market" with the result that unrealized gains or
losses are treated as though they were realized and the resulting gain or loss
is treated as ordinary or 60/40 gain or loss.

Generally, the hedging transactions and certain other transactions in
options, futures and forward contracts undertaken by a Portfolio, may result in
"straddles" for U.S. federal income tax purposes. In some cases, the straddle
rules also could apply in connection with swap agreements. The straddle rules
may affect the character of gains (or losses) realized by a Portfolio. In
addition, losses realized by a Portfolio on positions that are part of a
straddle may be deferred under the straddle rules, rather than being taken into
account in calculating the taxable income for the taxable year in which such
losses are realized. Because only a few regulations implementing the straddle
rules have been promulgated, the tax consequences of transactions in options,
futures, forward contracts, and swap agreements to a Portfolio are not entirely
clear. The transactions may increase the amount of short-term capital gain
realized by a Portfolio which is taxed as ordinary income when distributed to
shareholders.

A Portfolio may make one or more of the elections available under the Code
which are applicable to straddles. If a Portfolio makes any of the elections,
the amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
operate to accelerate the recognition of gains or losses from the affected
straddle positions.

Because application of the straddle rules may affect the character of gains
or losses, defer losses and/or accelerate the recognition of gains or losses
from the affected straddle positions, the amount which must be distributed to
shareholders, and which will be taxed to shareholders as ordinary income or
long-term capital gain, may be increased or decreased substantially as compared
to a portfolio that did not engage in such hedging transactions.

Rules governing the tax aspects of swap agreements are in a developing
stage and are not entirely clear in certain respects. Accordingly, while the
Portfolios intend to account for such transactions in a manner they deem to be
appropriate, the Internal Revenue Service might not accept such treatment. If
it did not, the status of a Portfolio as a regulated investment company might be
affected. The Trust intends to monitor developments in this area. Certain
requirements that must be met under the Code in order for a Portfolio to qualify
as a regulated investment company may limit the extent to which a Portfolio will
be able to engage in swap agreements.

Short Sales

Certain Portfolios may make short sales of securities. Short sales may
increase the amount of short-term capital gain realized by a Portfolio, which is
taxed as ordinary income when distributed to shareholders.

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Passive Foreign Investment Companies

Certain Portfolios may invest in the stock of foreign corporations which
may be classified under the Code as passive foreign investment companies
("PFICs"). In general, a foreign corporation is classified as a PFIC for a
taxable year if at least one-half of its assets constitute investment-type
assets or 75% or more of its gross income is investment-type income. If a
Portfolio receives a so-called "excess distribution" with respect to PFIC stock,
the Portfolio itself may be subject to tax on a portion of the excess
distribution, whether or not the corresponding income is distributed by the
Portfolio to stockholders. In general, under the PFIC rules, an excess
distribution is treated as having been realized ratably over the period during
which the Portfolio held the PFIC stock. A Portfolio itself will be subject to
tax on the portion, if any, of an excess distribution that is so allocated to
prior taxable years and an interest factor will be added to the tax, as if the
tax had been payable in such prior taxable years. Certain distributions from a
PFIC as well as gain from the sale of PFIC stock are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions might
have been classified as capital gain.

A Portfolio may be eligible to elect alternative tax treatment with respect
to PFIC stock. Under an election that currently is available in some
circumstances, a Portfolio generally would be required to include in its gross
income its share of the earnings of a PFIC on a current basis, regardless of
whether distributions are received from the PFIC in a given year. If this
election were made, the special rules, discussed above, relating to the taxation
of excess distributions, would not apply. In addition, another election may be
available that would involve marking to market a Portfolio's PFIC shares at the
end of each taxable year (and on certain other dates prescribed in the Code),
with the result that unrealized gains are treated as though they were realized.
If this election were made, tax at the Portfolio level under the PFIC rules
would generally be eliminated, but the Portfolio could, in limited
circumstances, incur nondeductible interest charges. A Portfolio's intention to
qualify annually as a regulated investment company may limit its elections with
respect to PFIC shares.

Because the application of the PFIC rules may affect, among other things,
the character of gains and the amount of gain or loss and the timing of the
recognition of income with respect to PFIC shares, and may subject a Portfolio
itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders and will be taxed to shareholders as ordinary income
or long-term capital gain may be increased or decreased substantially as
compared to a portfolio that did not invest in PFIC shares.

Foreign Currency Transactions

Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time a Portfolio accrues income or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Portfolio actually collects such receivables or pays
such liabilities generally are treated as ordinary income or loss. Similarly,
on disposition of debt securities denominated in a foreign currency and on
disposition of certain other instruments, gains or losses attributable to
fluctuations in the value of the foreign currency between the date of
acquisition of the security or contract and the date of disposition also are
treated as ordinary gain or loss. These gains and losses, referred to under the
Code as "section 988" gains or losses, may increase or decrease the amount of a
Portfolio's investment company taxable income to be distributed to its
shareholders as ordinary income.

Foreign Taxation

Income received by the Portfolios from sources within foreign countries may
be subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. In addition, the Adviser intends to manage the Portfolios with the
intention of minimizing foreign taxation in cases where it is deemed prudent to
do so. If more than 50% of the value of the PIMCO Foreign Bond, Global Bond or
Emerging Markets Bond Portfolios'

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total assets at the close of their taxable year consists of securities of
foreign corporations, such Portfolio will be eligible to elect to "pass-through"
to the Portfolio's shareholders the amount of foreign income and similar taxes
paid by the Portfolio. If this election is made, a shareholder generally subject
to tax will be required to include in gross income (in addition to taxable
dividends actually received) his pro rata share of the foreign taxes paid by the
Portfolio, and may be entitled either to deduct (as an itemized deduction) his
or her pro rata share of foreign taxes in computing his taxable income or to use
it (subject to limitations) as a foreign tax credit against his or her U.S.
federal income tax liability. No deduction for foreign taxes may be claimed by a
shareholder who does not itemize deductions. Each shareholder will be notified
within 60 days after the close of the Portfolio's taxable year whether the
foreign taxes paid by the Portfolio will "pass-through" for that year.

Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to his or her total
foreign source taxable income. For this purpose, if the pass-through election
is made, the source of the PIMCO Foreign Bond, Global Bond or Emerging Markets
Bond Portfolios' income will flow through to shareholders of the Trust. With
respect to such Portfolios, gains from the sale of securities will be treated as
derived from U.S. sources and certain currency fluctuation gains, including
fluctuation gains from foreign currency-denominated debt securities, receivables
and payables will be treated as ordinary income derived from U.S. sources. The
limitation on the foreign tax credit is applied separately to foreign source
passive income, and to certain other types of income. Shareholders may be
unable to claim a credit for the full amount of their proportionate share of the
foreign taxes paid by the Portfolio. The foreign tax credit can be used to
offset only 90% of the revised alternative minimum tax imposed on corporations
and individuals and foreign taxes generally are not deductible in computing
alternative minimum taxable income.

Original Issue Discount

Some of the debt securities (with a fixed maturity date of more than one
year from the date of issuance) that may be acquired by a Portfolio may be
treated as debt securities that are issued originally at a discount. Generally,
the amount of the original issue discount ("OID") is treated as interest income
and is included in income over the term of the debt security, even though
payment of that amount is not received until a later time, usually when the debt
security matures. A portion of the OID includable in income with respect to
certain high-yield corporate debt securities may be treated as a dividend for
Federal income tax purposes.

Some of the debt securities (with a fixed maturity date of more than one
year from the date of issuance) that may be acquired by a Portfolio in the
secondary market may be treated as having market discount. Generally, any gain
recognized on the disposition of, and any partial payment of principal on, a
debt security having market discount is treated as ordinary income to the extent
the gain, or principal payment, does not exceed the "accrued market discount" on
such debt security. Market discount generally accrues in equal daily
installments. A Portfolio may make one or more of the elections applicable to
debt securities having market discount, which could affect the character and
timing of recognition of income

Some debt securities (with a fixed maturity date of one year or less from
the date of issuance) that may be acquired by a Portfolio may be treated as
having acquisition discount, or OID in the case of certain types of debt
securities. Generally, the Portfolio will be required to include the
acquisition discount, or OID, in income over the term of the debt security, even
though payment of that amount is not received until a later time, usually when
the debt security matures. The Portfolio may make one or more of the elections
applicable to debt securities having acquisition discount, or OID, which could
affect the character and timing of recognition of income.

A Portfolio generally will be required to distribute dividends to
shareholders representing discount on debt securities that is currently
includable in income, even though cash representing such

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income may not have been received by the Portfolio. Cash to pay such dividends
may be obtained from sales proceeds of securities held by the Portfolio.

Inflation-Indexed Bonds

Coupon payments received by a Portfolio from inflation-indexed bonds will
be includable in the Portfolio's gross income in the period in which they
accrue. Periodic adjustments for inflation in the principal value of these
securities also may give rise to original issue discount, which, likewise, will
be includable in the Portfolio's gross income on a current basis, regardless of
whether the Portfolio receives any cash payments. Amounts includable in a
Portfolio's gross income become subject to tax-related distribution
requirements. Accordingly, a Portfolio may be required to make annual
distributions to shareholders in excess of the cash received in a given period
from these investments. As a result, the Portfolio may be required to liquidate
certain investments at a time when it is not advantageous to do so. If the
principal value of an inflation-indexed bond is adjusted downward in any period
as a result of deflation, the reduction may be treated as a loss to the extent
the reduction exceeds coupon payments received in that period; in that case, the
amount distributable by the Portfolio may be reduced and amounts distributed
previously in the taxable year may be characterized in some circumstances as a
return of capital.

Other Taxation

Distributions also may be subject to additional state, local and foreign
taxes, depending on each shareholder's particular situation. Under the laws of
various states, distributions of investment company taxable income generally are
taxable to shareholders even though all or a substantial portion of such
distributions may be derived from interest on certain federal obligations which,
if the interest were received directly by a resident of such state, would be
exempt from such state's income tax ("qualifying federal obligations").
However, some states may exempt all or a portion of such distributions from
income tax to the extent the shareholder is able to establish that the
distribution is derived from qualifying federal obligations. Moreover, for
state income tax purposes, interest on some federal obligations generally is not
exempt from taxation, whether received directly by a shareholder or through
distributions of investment company taxable income (for example, interest on
FNMA Certificates and GNMA Certificates). Each Portfolio will provide
information annually to shareholders indicating the amount and percentage of a
Portfolio's dividend distribution which is attributable to interest on federal
obligations, and will indicate to the extent possible from what types of federal
obligations such dividends are derived.

OTHER INFORMATION

Capitalization

The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest with a par value of $0.001 each. The Board of
Trustees may establish additional series (with different investment objectives
and fundamental policies) at any time in the future. Establishment and offering
of additional series will not alter the rights of the Trust's shareholders.
When issued, shares are fully paid, non-assessable, redeemable and freely
transferable. Shares do not have preemptive rights or subscription rights. In
liquidation of a Portfolio, each shareholder is entitled to receive his pro rata
share of the net assets of that Portfolio.

Under Delaware law, shareholders are not personally liable for the
obligations of the Trust. In addition, the Trust Instrument disclaims liability
of the shareholders, Trustees or officers of the Trust for acts or obligations
of the Trust, which are binding only on the assets and property of the Trust,
and requires that notice of the disclaimer be given in each contract or
obligation entered into or executed by the Trust or the Trustees. The Trust
Instrument also provides for indemnification out of Trust property for all loss
and expense of any shareholder held personally liable for the obligations of the
Trust. However,

49
<PAGE>

there is no certainty that the limited liability of shareholders of a Delaware
business trust will be recognized in every state. Even in such a circumstance,
the risk of a shareholder incurring financial loss on account of shareholder
liability would be limited to circumstances in which the contractual disclaimer
against shareholder liability is inoperative or the Trust itself is unable to
meet its obligations, and thus should be considered remote.

Performance Information

Each Portfolio may, from time to time, include information regarding its
performance in advertisements or reports to shareholders or prospective
investors. Performance information for the Portfolios will not be advertised or
included in sales literature unless accompanied by comparable performance
information for a separate account to which the Portfolios offer their shares.

The Trust may, from time to time, include the yield and effective yield of
the PIMCO Money Market Portfolio, and the yield and total return for all of the
Portfolios, computed in accordance with SEC-prescribed formulas, in
advertisements or reports to shareholders, prospective investors or other
appropriate parties. Current yield for the PIMCO Money Market Portfolio will be
based on the change in the value of hypothetical investment (exclusive of
capital changes) over a particular 7-day period less a pro-rata share of
Portfolio expenses accrued over that period (the "base period"), and stated as a
percentage of the investment at the start of the base period (the "base period
return"). The base period return is then annualized by multiplying by 365/7,
with the resulting yield figure carried to at least the nearest hundredth of one
percent. "Effective yield" for the PIMCO Money Market Portfolio assumes that all
dividends received during an annual period have been reinvested. Calculation of
"effective yield" begins with the same "base period return" used in the
calculation of yield, which is then annualized to reflect weekly compounding
pursuant to the following formula:

Effective Yield = [(Base Period Return +1)365/7] - 1

Quotations of yield for the remaining Portfolios will be based on all
investment income per share (as defined by the SEC) during a particular 30-day
(or one month) period (including dividends and interest), less expenses accrued
during the period ("net investment income"), and are computed by dividing net
investment income by the maximum offering price per share on the last day of the
period, according to the following formula:

YIELD = 2[( a-b + 1)6-1]
---
cd

where a = dividends and interest earned during the period,

b = expenses accrued for the period (net of reimbursements),

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends, and

d = the maximum offering price per share on the last day of the
period.

Quotations of average annual total return for a Portfolio will be expressed
in terms of the average annual compounded rate of return of a hypothetical
investment in the Portfolio over periods of one, five and ten years (up to the
life of the Portfolio), calculated pursuant to the following formula: P (1 +
T)n = ERV (where P = a hypothetical initial payment of $1,000, T = the average
annual total return, n = the number of years, and ERV = the ending redeemable
value of a hypothetical $1,000 payment made at the beginning of the period).
Except as noted below, all total return figures reflect, to the extent
applicable, the deduction of a proportional share of Portfolio expenses on an
annual basis, and assume that all

50
<PAGE>

dividends and distributions are reinvested when paid. The Portfolios also may,
with respect to certain periods of less than one year, provide total return
information for that period that is unannualized. Quotations of total return may
also be shown for other periods. Any such information would be accompanied by
standardized total return information. Total return is measured by comparing the
value of an investment in the Portfolio at the beginning of the relevant period
to the redemption value of the investment in the Portfolio at the end of the
period (assuming immediate reinvestment of any dividends or capital gains
distributions at net asset value). The Portfolios may advertise total return
using alternative methods that reflect all elements of return, but that may be
adjusted to reflect the cumulative impact of alternative fee and expense
structures, such as the currently effective advisory and administrative fees for
the Portfolios.

Current distribution information for a Portfolio will be based on
distributions for a specified period (i.e., total dividends from net investment
income), divided by Portfolio net asset value per share on the last day of the
period and annualized according to the following formula:

DIVIDEND YIELD = (((a/b)*365)/c)

where a = actual dividends distributed for the calendar month in
question,

b = number of days of dividend declaration in the month in
question, and

c = net asset value (NAV) calculated on the last business day of
the month in question.

The rate of current distributions does not reflect deductions for
unrealized losses from transactions in derivative instruments such as options
and futures, which may reduce total return. Current distribution rates differ
from standardized yield rates in that they represent what a Portfolio has
declared and paid to shareholders as of the end of a specified period rather
than the Portfolio's actual net investment income for that same period.
Distribution rates will exclude net realized short-term capital gains. The rate
of current distributions for a Portfolio should be evaluated in light of these
differences and in light of the Portfolio's total return figures, which will
always accompany any calculation of the rate of current distributions.

Performance information for a Portfolio may also be compared to various
unmanaged indexes, such as the Standard & Poor's 500 Composite Stock Price
Index, the Dow Jones Industrial Average, the Lehman Brothers Aggregate Bond
Index, the Lehman Brothers Mortgage-Backed Securities Index, the Merrill Lynch 1
to 3 Year Treasury Index, the Lehman Intermediate and 20+ Year Treasury Bond
Index, the Lehman BB Intermediate Corporate Index, indexes prepared by Lipper
Analytical Services, the J.P. Morgan Global Index, the J.P. Morgan Emerging
Markets Bond Index Plus, the Salomon Brothers World Government Bond Index-10 Non
U.S.-Dollar Hedged and the J.P. Morgan Government Bond Index Non U.S.-Dollar
Hedged. Unmanaged indexes (i.e., other than Lipper) generally do not reflect
deductions for administrative and management costs and expenses. PIMCO may
report to shareholders or to the public in advertisements concerning the
performance of PIMCO as adviser to clients other than the Trust, or on the
comparative performance or standing of PIMCO in relation to other money
managers. PIMCO also may provide current or prospective private account
clients, in connection with standardized performance information for the
Portfolios, performance information for the Portfolios gross of fees and
expenses for the purpose of assisting such clients in evaluating similar
performance information provided by other investment managers or institutions.
Comparative information may be compiled or provided by independent ratings
services or by news organizations. Any performance information, whether related
to the Portfolios or to the Adviser, should be considered in light of the
Portfolios' investment objectives and policies, characteristics and quality of
the Portfolios, and the market conditions during the time period indicated, and
should not be considered to be representative of what may be achieved in the
future.

51
<PAGE>

Performance information for a Portfolio will not take into account charges
or deductions against a Separate Account or Variable Contract specific
deductions for cost of insurance charges, premium loads, administrative fees,
maintenance fees, premium taxes, mortality and expense risk charges, or other
charges that may be incurred under a Variable Contract for which the Portfolio
serves as an underlying investment vehicle. A Portfolio's performance should not
be compared with the performance of mutual funds that sell their shares directly
to the public since the figures provided do not reflect charges against a
Separate Account or the Variable Contracts.

For the one month period ended December 31, 1998, the yield of the
following Portfolios was as follows (all numbers are annualized): [To be
updated]

<TABLE>
<CAPTION>
Yield for Period
Portfolio Ended December 31, 1999
- --------- -----------------------
<S> <C>
Money Market Portfolio ____%
Short-Term Bond Portfolio ____%
Low Duration Bond Portfolio ____%
Real Return Bond Portfolio ____%
Total Return Bond II Portfolio ____%
Total Return Bond Portfolio 6.40%
High Yield Bond Portfolio 8.28%
Long-Term U.S. Government Bond Portfolio ____%
Foreign Bond Portfolio ____%
StocksPLUS Growth and Income Portfolio 5.46%
</TABLE>

52
<PAGE>

The table below sets forth the average annual total return of the following
Portfolios for the periods ended December 31, 1999. [To be updated]

Total Return for Periods Ended December 31, 1999

Since Inception Inception
of Portfolio Date of
Portfolio (Cumulative) Portfolio
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Money Market Portfolio 9/30/99
- ---------------------------------------------------------------------------------------
Short-Term Bond Portfolio 9/30/99
- ---------------------------------------------------------------------------------------
Low Duration Bond Portfolio 2/16/99
- ---------------------------------------------------------------------------------------
Real Return Bond Portfolio 9/30/99
- ---------------------------------------------------------------------------------------
Total Return Bond Portfolio 8.61% 12/31/99
- ---------------------------------------------------------------------------------------
Total Return II Bond Portfolio 5/28/99
- ---------------------------------------------------------------------------------------
High Yield Bond Portfolio 1.80% 4/30/98
- ---------------------------------------------------------------------------------------
Long-Term U.S. Government Bond Portfolio
- ---------------------------------------------------------------------------------------
Foreign Bond Portfolio 2/16/99
- ---------------------------------------------------------------------------------------
StocksPLUS Growth and Income Portfolio 30.11% 12/31/97
=======================================================================================
</TABLE>

For the month ended December 31, 1999, the current distribution rates
(annualized) for the following Portfolios were as follows:

Distribution
Fund Rate
<S> <C>
- ---------------------------------------------------------------------------------------
Money Market Portfolio
- ---------------------------------------------------------------------------------------
Short-Term Bond Portfolio
- ---------------------------------------------------------------------------------------
Low Duration Bond Portfolio
- ---------------------------------------------------------------------------------------
Real Return Bond Portfolio
- ---------------------------------------------------------------------------------------
Total Return Bond Portfolio 6.51%
- ---------------------------------------------------------------------------------------
Total Return II Bond Portfolio
- ---------------------------------------------------------------------------------------
High Yield Bond Portfolio 8.46%
- ---------------------------------------------------------------------------------------
Long-Term U.S. Government Bond Portfolio
- ---------------------------------------------------------------------------------------
Foreign Bond Portfolio
- ---------------------------------------------------------------------------------------
StocksPLUS Growth and Income Portfolio N/A
=======================================================================================
</TABLE>

The Trust may also include in its advertisements or in reports to
shareholder, prospective investors or other appropriate parties performance
information regarding certain series (the "Funds") of PIMCO Funds: Pacific
Investment Management Series (the "PIMS") or PIMCO Funds: Multi-Manager Series
("MMS") which have investment objectives, policies and strategies substantially
the same as a corresponding Portfolio of the Trust. In addition, the current
portfolio manager for each Fund is the same as the current portfolio manager for
the corresponding Portfolio of the Trust. The methods discussed above with
regard to calculating the yield, total return and distribution rates for the
Portfolios will also be used to calculate the same information for the Funds,
although performance information for the Funds will reflect the deduction of
sales loads and other charges to which the Funds are subject.

53
<PAGE>

The following table shows which Fund of PIMS or MMS corresponds to each
Portfolio of the Trust:

Portfolio Fund
- --------- ----
<S> <C>
Money Market Portfolio Money Market Fund
Short-Term Bond Portfolio Short-Term Fund
Low Duration Bond Portfolio Low Duration Fund
Real Return Bond Portfolio Real Return Bond Fund
Total Return Bond Portfolio Total Return Fund
Total Return Bond Portfolio II Total Return Fund II
High Yield Bond Portfolio High Yield Fund
Long-Term U.S. Government Bond Portfolio Long-Term U.S. Government Fund
Global Bond Portfolio Global Bond Fund
Foreign Bond Portfolio Foreign Bond Fund
Emerging Markets Bond Portfolio Emerging Markets Bond Fund
Strategic Balanced Portfolio Strategic Balanced Fund
StocksPLUS Growth and Income Portfolio StocksPLUS Fund
</TABLE>

The yield of the Institutional Class of the PIMCO Money Market Fund for the
seven day period ended December 31, 1999 was [4.81%]. The effective yield of
the Institutional Class of the PIMCO Money Market Fund for the seven day period
ended December 31, 1999 was [4.92%].

For the one month period ended December 31, 1998, the yield of the
Institutional Class of the Funds was as follows (all numbers are annualized):
[To be updated]

<TABLE>
<CAPTION>
Yield for Period
Fund Ended December 31, 1998
- ---- -----------------------
<S> <C>
Money Market Fund 4.97%
Short-Term Fund 5.58%
Low Duration Fund 5.92%
Real Return Bond Fund 5.95%
Total Return Fund 6.17%
Total Return Fund II 5.51%
High Yield Fund 8.22%
Long-Term U.S. Government Fund 6.03%
Global Bond Fund 5.72%
Foreign Bond Fund 6.14%
Strategic Balanced Fund 5.29%
StocksPLUS Fund 5.66%
</TABLE>

The average annual total returns of the Institutional Class shares of the
corresponding Funds of PIMS and MMS are provided in the Trust's prospectus under
the caption "Performance Information of Similar Funds."

54
<PAGE>

For the month ended December 31, 1999, the current distribution rates
(annualized) for the Institutional Class shares of the following Funds were as
follows: [To be updated.]

<TABLE>
<CAPTION>
Fund Distribution Rate
- ---- -----------------
<S> <C>
Money Market Fund 4.85%
Short-Term Fund 5.55%
Low Duration Fund 6.52%
Real Return Bond Fund 5.96%
Total Return Fund 5.85%
Total Return Fund II 5.62%
High Yield Fund 8.49%
Long-Term U.S. Government Fund 5.68%
Global Bond Fund 4.93%
Foreign Bond Fund 5.45%
Strategic Balanced Fund N/A
StocksPLUS Fund N/A
</TABLE>

In its advertisements and other materials, the Trust may compare the
returns over periods of time of investments in stocks, bonds and treasury bills
to each other and to the general rate of inflation. For example, the average
annual return of each during the 25 years from 1974 to 1998 was:

*Stocks: 14.9%
Bonds: 9.9%
T-Bills: 7.0%
Inflation: 5.2%

*Returns of unmanaged indexes do not reflect past or future performance of
any of the Portfolios of PIMCO Variable Insurance Trust. Stocks are represented
by Ibbotson's Common Stock Total Return Index. Bonds are represented by
Ibbotson's Long-term Corporate Bond Index. T-bills are represented by Ibbotson's
Treasury Bill Index and Inflation is represented by the Cost of Living Index.
These are all unmanaged indices, which can not be invested in directly. While
Treasury bills are insured and offer a fixed rate of return, both the principal
and yield of investment securities will fluctuate with changes in market
conditions. Source: Ibbotson, Roger G., and Rex A. Sinquefiled, Stocks, Bonds,
Bill and Inflation (SBBI), 1989, updated in Stocks, Bonds, Bills and Inflation
1999 Yearbook, Ibbotson Associates, Chicago. All rights reserved.

The Trust may also compare the relative historic returns and range of
returns for an investment in each of common stocks, bonds and treasury bills to
a portfolio that blends all three investments. For example, over the 25 years
from 1974-1998, the average annual return of stocks comprising the Ibbotson's
Large Company Stock Total Return Index ranged from -26.5% to 37.4% while the
annual return of a hypothetical portfolio comprised 40% of such common stocks,
40% of bonds comprising the Ibbotson's Long-term Corporate bond Index and 20% of
Treasury bills comprising the Ibbottson's Treasury Bill Index (a "mixed
portfolio") would have ranged from -10.2% to 28.2% over the same period. The
average annual returns of each investment for each of the years from 1975
through 1999 is set forth in the following table.

<TABLE>
<CAPTION>
MIXED
YEAR STOCKS BONDS T-BILLS INFLATION PORTFOLIO
- -------- ------- ------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1975 37.20% 14.64% 5.80% 7.01% 21.90%
1976 23.84% 18.65% 5.08% 4.81% 18.01%
1977 -7.18% 1.71% 5.12% 6.77% -1.17%
1978 6.56% -0.07% 7.18% 9.03% 4.03%
1979 18.44% -4.18% 10.38% 13.31% 7.78%
</TABLE>

55
<PAGE>

*Returns of unmanaged indexes do not reflect past or future performance of any
of the Portfolios of PIMCO Variable Insurance Trust. Stocks are represented by
Ibbotson's Large Company Stock Total Return Index. Bonds are represented by
Ibbotson's Long-term Corporate Bond Index. T'bills are represented by Ibbotson's
Treasury Bill Index and Inflation is represented by the Cost of Living Index.
These are all unmanaged indices, which can not be invested in directly. While
Treasury bills are insured and offer a fixed rate of return, both the principal
and yield of investment securities will fluctuate with changes in market
conditions. Source: Ibbotson, Roger G., and Rex A. Sinquefiled, Stocks, Bonds,
Bill and Inflation (SBBI), 1989, updated in Stocks, Bonds, Bills and Inflation
1999 Yearbook, Ibbotson Associates, Chicago. All rights reserved.

The Trust may use in its advertisement and other materials examples
designed to demonstrate the effect of compounding when an investment is
maintained over several or many years. For example, the following table shows
the annual and total contributions necessary to accumulate $200,000 of savings
(assuming a fixed rate of return) over various periods of time:

<TABLE>
<CAPTION>
Investment Annual Total Total
Period Contribution Contribution Saved
---------- ------------ ------------ -----
<S> <C> <C> <C>
30 Years $ 1,979 $ 59,370 $200,000
25 Years $ 2,955 $ 73,875 $200,000
20 Years $ 4,559 $ 91,180 $200,000
15 Years $ 7,438 $111,570 $200,000
10 Years $13,529 $135,290 $200,000
</TABLE>

This hypothetical example assumes a fixed 7% return compounded annually and a
guaranteed return of principal. The example is intended to show the benefits of
a long-term, regular investment program, and is in no way representative of any
past or future performance of a Portfolio. There can be no guarantee that you
will be able to find an investment that would provide such a return at the times
you invest and an investor in any of the Portfolios should be aware that certain
of the Portfolios have experienced periods of negative growth in the past and
may again in the future.

The Trust may set forth in its advertisements and other materials
information regarding the relative reliance in recent years on personal savings
for retirement income versus reliance on Social

56
<PAGE>

Security benefits and company sponsored retirement plans. For example, the
following table offers such information for 1997:

<TABLE>
<CAPTION>
% of Income for Individuals
Aged 65 Years and Older in 1997*
-----------------------------------------------
Social Security
Year and Pension Plans Other
- ---- ----------------------------------------------- ----
<S> <C> <C>
1990 43% 57%
</TABLE>

* For individuals with an annual income of at least $51,000. Other
includes personal savings, earnings and other undisclosed sources of income.
Source: Social Security Administration.

Articles or reports which include information relating to performance,
rankings and other characteristics of the Portfolios may appear in various
national publications and services including, but not limited to: The Wall
Street Journal, Barron's, Pensions and Investments, Forbes, Smart Money, Mutual
Portfolio Magazine, The New York Times, Kiplinger's Personal Finance, Fortune,
Money Magazine, Morningstar's Mutual Portfolio Values, CDA Investment
Technologies and The Donoghue Organization. Some or all of these publications or
reports may publish their own rankings or performance reviews of mutual funds,
including the Portfolios, and may provide information relating to the Adviser,
including descriptions of assets under management and client base, and opinions
of the author(s) regarding the skills of personnel and employees of the Adviser
who have portfolio management responsibility. From time to time, the Trust may
include references to or reprints of such publications or reports in its
advertisements and other information relating to the Portfolios.

From time to time, the Trust may set forth in its advertisements and other
materials information about the growth of a certain dollar-amount invested in
one or more of the Portfolios over a specified period of time and may use charts
and graphs to display that growth.

From time to time, the Trust may set forth in its advertisements and other
materials the names of and additional information regarding investment analysts
employed by the Adviser who assist with portfolio management and research
activities on behalf of the Portfolios. The following lists various analysts
associated with the Adviser: Jane Howe, Mark Hudoff, Doris Nakamura and Ray
Kennedy.

Investment results of the Portfolios or the Funds will fluctuate over time,
and any presentation of the Portfolios' or the Funds' total return or yield for
any prior period should not be considered as a representation of what an
investor's total return or yield may be in any future period. The Trust's Annual
Report contains additional performance information for the Portfolios and is
available upon request, without charge, by calling (888) 746-2688.

Voting Rights

Under the Trust Instrument, the Trust is not required to hold annual
meetings of Trust shareholders to elect Trustees or for other purposes. It is
not anticipated that the Trust will hold shareholders' meetings unless required
by law or the Trust Instrument. In this regard, the Trust will be required to
hold a meeting to elect Trustees to fill any existing vacancies on the Board if,
at any time, fewer than a majority of the Trustees have been elected by the
shareholders of the Trust. In addition, the Trust Instrument provides that the
holders of not less than two-thirds of the outstanding shares of the Trust may
remove a person serving as Trustee at any shareholder meeting. The Trustees are
required to call a meeting of shareholders if requested in writing to do so by
the holders of not less than ten percent of the outstanding shares of the Trust.
The Trust's shares do not have cumulative voting rights, so that a holder of
more than 50% of the outstanding shares may elect the entire Board of Trustees,
in which case the holders of the remaining shares would not be able to elect any
Trustees. Shareholders of a class of shares have different voting rights with
respect to matters that affect only that class.

57
<PAGE>

Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in the Prospectus or this Statement of
Additional Information, the phrase "vote of a majority of the outstanding
shares" of a Portfolio (or the Trust) means the vote of the lesser of: (1) 67%
of the shares of the Portfolio (or the Trust) present at a meeting, if the
holders of more than 50% of the outstanding shares are present in person or by
proxy; or (2) more than 50% of the outstanding shares of the Portfolio (or the
Trust).

In accordance with current laws, it is anticipated that an insurance
company issuing a variable contract that participates in the Portfolios will
request voting instructions from variable contract owners and will vote shares
or other voting interests in the separate account in proportion to the votes
received.

Year 2000 Readiness Disclosure

As with all investment advisers, PIMCO's business operations are heavily
dependent upon a complex worldwide network of financial systems that utilize
date fields. Some of the world's computer systems may be unable to correctly
recognize, interpret or use dates beyond the year 1999. This inability might
lead to significant business disruptions. PIMCO has taken steps to assure that
its computer systems function properly.

PIMCO's ability to endure any adverse effects of the transition to Year
2000 is highly dependent upon the efforts of third parties, particularly
issuers, brokers, dealers, and custodians. The failure of third party
organizations to resolve their own processing issues with respect to the Year
2000 Problem in a timely manner could have a material adverse effect on PIMCO's
business. The management of PIMCO believes that the transition to Year 2000
will not have a material adverse effect on its business or operations as of the
date of this Statement of Additional Information. However, complications as yet
unidentified may arise in internal or external systems, with data providers,
with other securities firms or institutions, with issuers, with other
counterparties, with other entities, or even with general economic conditions
related to the Year 2000 in general. Although PIMCO's efforts and expenditures
on Year 2000 issues are substantial, there can be no assurances that
shareholders or others will not suffer from disruptions or adverse results
arising as a consequence of Year 2000.

Custodian

Investors Fiduciary Trust Company ("IFTC"), 801 Pennsylvania, Kansas City,
Missouri 64105 serves as custodian for assets of all Portfolios. Pursuant to
rules adopted under the 1940 Act, the Trust may maintain foreign securities and
cash in the custody of certain eligible foreign banks and securities
depositories. Pursuant to a sub-custody agreement between IFTC and State Street
Bank and Trust Company ("State Street"), State Street serves as subcustodian of
the Trust for the custody of the foreign securities acquired by those Portfolios
that invest in foreign securities. No assurance can be given that expropriation,
nationalization, freezes, or confiscation of assets that would impact assets of
the Portfolios will not occur, and shareholders bear the risk of losses arising
from these or other events.

Independent Accountants

PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105, serves as
independent public accountants for all Portfolios. PricewaterhouseCoopers LLP
provides audit services and consultation in connection with review of SEC and
IRS filings.

Counsel

Dechert Price & Rhoads, 1775 Eye Street, N.W., Washington, D.C. 20006,
passes upon certain legal matters in connection with the shares offered by the
Trust, and also acts as counsel to the Trust.

58
<PAGE>

Registration Statement

This Statement of Additional Information and the Prospectus do not contain
all of the information included in the Trust's registration statement filed with
the SEC under the 1933 Act with respect to the securities offered hereby,
certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. The registration statement, including the exhibits
filed therewith, may be examined at the offices of the SEC in Washington, D.C.

Statements contained herein and in the Prospectus as to the contents of any
contract or other documents referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.

Financial Statements

Financial statements for the Trust as of December 31, 1999 for the fiscal
year then ended, including notes thereto and the report of
PricewaterhouseCoopers LLP thereon dated February ____, 2000, are incorporated
by reference from the Trust's 1999 Annual Report.

59
<PAGE>

PART C
------

OTHER INFORMATION
-----------------

<TABLE>
<CAPTION>
Item 23. Exhibits
- -------- --------
<S> <C> <C>
(a) (1) Trust Instrument dated October 3, 1997/(1)/

(2) Certificate of Trust dated October 3, 1997/(1)/

(b) By-Laws/(1)/

(d) (1) Form of Investment Advisory Contract*

(e) (1) Form of Distribution Contract/(2)/

(2) Form of Supplement to Distribution Contract relating to Real
Return, and Long-Term U.S. Government/(5)/

(3) Form of Supplement to Distribution Contract relating to
Total Return Bond Portfolio II/(6)/

(f) Not Applicable

(g) (1) Form of Letter Agreement/(3)/

(2) Form of Custodian Agreement/(4)/

(h) (1) Form of Administration Agreement*

(2) Form of Supplement to Administration Agreement relating to
Real Return, and Long-Term U.S. Government/(5)/

(3) Form of Supplement to Administration Agreement relating to
Total Return Bond Portfolio II/(6)/

(4) Form of Participation Agreement/(2)/

(5) Form of Services Agreement/(2)/

(6) Form of Amended Expense Limitation Agreement*

(i) Opinion and Consent of Counsel/(3)/

(j) Consent of Independent Auditors*

(k) Not Applicable
</TABLE>

1
<PAGE>

(l) Form of Subscription Agreement/(2)/

(m) Not Applicable

(n) Form of Multi-Class Plan*

(o) Not Applicable

</TABLE>
- ----------
/(1)/ Incorporated by reference from the initial Registration Statement filed
on October 3, 1997.

/(2)/ Incorporated by reference from Pre-Effective Amendment No. 1 to the
Registration Statement filed on December 19, 1997.

/(3)/ Incorporated by reference from Pre-Effective Amendment No. 2 to the
Registration Statement filed on December 24, 1997.

/(4)/ Incorporated by reference from Post-Effective Amendment No. 37 to the
Registration Statement of PIMCO Funds: Pacific Investment Management
Series (File No. 33-12113, 811-5028) as filed on November 17, 1997.

/(5)/ Incorporated by reference from Post-Effective Amendment No. 2 to the
Registration Statement filed on September 25, 1998.

/(6)/ Incorporated by reference from Post-Effective Amendment No. 4 to the
Registration Statement filed on April 30, 1999.

* To be filed by amendment.

Item 24. Persons Controlled by or Under Common Control with Registrant
- -------- -------------------------------------------------------------

No person is controlled by or under common control with the
Registrant.

Item 25. Indemnification
- -------- ---------------

Reference is made to Article X of the Registrant's Trust
Instrument (Exhibit 1) which is incorporated by reference herein.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant
to the Registrant's Trust Instrument, its By-Laws or otherwise,
the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by trustees, officers or controlling persons of
the Registrant in connection with the successful defense of any
act, suit or

2
<PAGE>

proceeding) is asserted by such trustees, officers or controlling persons in
connection with shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issues.

Item 26. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------

The directors and officers of PIMCO and their business and other
connections are as follows:

<TABLE>
<CAPTION>
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Allan, George C. Senior Vice President, PIMCO and PIMCO Management, Inc.

Ariza, Jr., Augustine Vice President, PIMCO and PIMCO Management, Inc.

Arnold, Tamara J. Senior Vice President, PIMCO and PIMCO Management, Inc.

Asay, Michael R. Senior Vice President, PIMCO and PIMCO Management, Inc.

Baker, Brian P. Vice President, PIMCO and PIMCO Management, Inc.

Barbi, Leslie A. Executive Vice President, PIMCO and PIMCO Management, Inc.

Beaumont, Stephen B. Vice President, PIMCO and PIMCO Management, Inc.

Benz, William R. II Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.; Member of PIMCO Partners LLC.

Bishop, Gregory A. Vice President, PIMCO and PIMCO Management, Inc.

Brick, Andrew Senior Vice President, PIMCO, and PIMCO Management, Inc.

Brynjolfsson, John B. Senior Vice President, PIMCO and PIMCO Management, Inc.

Burns, R. Wesley Managing Director and Executive Committee Member, PIMCO.
Director and Managing Director, PIMCO Management, Inc.; Member
of PIMCO Partners LLC. President and Trustee of the Trust and
PIMCO Variable Insurance Trust; President and Director of PIMCO
Commercial Mortgage Securities Trust, Inc.; Director, PIMCO
Funds: Global Investors Series plc and PIMCO Global Advisors
(Ireland) Limited.
</TABLE>

-3-
<PAGE>

<TABLE>
<CAPTION>
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Callin, Sabrina C. Vice President, PIMCO and PIMCO Management, Inc.

Clark, Marcia K. Vice President, PIMCO and PIMCO Management, Inc.

Coleman, Jerry Vice President, PIMCO and PIMCO Management, Inc.

Conseil, Cyrille Vice President, PIMCO and PIMCO Management, Inc.

Cummings, Doug Vice President, PIMCO and PIMCO Management, Inc.

Cupps, Wendy W. Senior Vice President, PIMCO and PIMCO Management, Inc.

Dialynas, Chris Managing Director, PIMCO; Director and Managing Director,
PIMCO Management, Inc.; Member of PIMCO Partners LLC.

Dorff, David J. Vice President, PIMCO and PIMCO Management, Inc.

Dow, Michael Senior Vice President, PIMCO, PIMCO Management, Inc. and the
Trust.

Dunn, Anita Vice President, PIMCO and PIMCO Management, Inc.

Durn, Sandra Vice President, PIMCO and PIMCO Management, Inc.

Ehlert, A. Benjamin Executive Vice President, PIMCO and PIMCO Management, Inc.

El-Erian, Mohamed A. Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.

Esquibel, Albert Vice President, PIMCO and PIMCO Management, Inc.

Ettl, Robert A. Executive Senior Vice President, PIMCO and PIMCO Management,
Inc.

Evans, Stephanie D. Vice President, PIMCO and PIMCO Management, Inc.
</TABLE>

-4-
<PAGE>

<TABLE>
<CAPTION>
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Fitzgerald, Robert M. Chief Financial Officer and Treasurer, PIMCO, PIMCO Management,
Inc., Cadence Capital Management, Inc., NFJ Investment Group,
NFJ Management, Inc., Parametric Portfolio Associates,
Parametric Management Inc., StocksPLUS Management Inc. and
PIMCO Funds Distributors LLC; Chief Financial Officer and
Assistant Treasurer, Cadence Capital Management; Director,
Senior Vice President and Chief Financial Officer, Oppenheimer
Group, Inc.; Chief Financial Officer and Senior Vice President,
PIMCO Advisors; Chief Financial Officer, PIMCO Global Advisors
LLC.

Foulke, Steve A. Vice President, PIMCO and PIMCO Management, Inc.

Frisch, Ursula T. Vice President, PIMCO and PIMCO Management, Inc.

Garbuzov, Yuri P. Vice President, PIMCO and PIMCO Management, Inc.

Gross, William H. Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.; Director and Vice President, StocksPLUS
Management, Inc.; Senior Vice President of the Trust and PIMCO
Variable Insurance Trust; Member of Management Board, PIMCO
Advisors; Member of PIMCO Partners LLC.

Hague, John L. Managing Director and Executive Committee Member, PIMCO;
Director and Managing Director, PIMCO Management, Inc.; Member
of PIMCO Partners LLC.

Hally, Gordon C. Executive Vice President, PIMCO and PIMCO Management, Inc.

Hamalainen, Pasi M. Managing Director, PIMCO; Director and Managing Director,
PIMCO Management, Inc.

Hardaway, John P. Senior Vice President, PIMCO and PIMCO Management, Inc.;
Treasurer of the Trust, PIMCO Variable Insurance Trust, PIMCO
Funds: Multi-Manager Series and PIMCO Commercial Mortgage
Securities Trust, Inc.
</TABLE>

-5-
<PAGE>

<TABLE>
<CAPTION>
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Harris, Brent R. Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.; Director and Vice President, StocksPLUS
Management, Inc.; Trustee and Chairman of the Trust and PIMCO
Variable Insurance Trust; Director and Chairman, PIMCO
Commercial Mortgage Securities Trust, Inc.; Member of
Management Board and Executive Committee, PIMCO Advisors;
Member of PIMCO Partners LLC.

Hattesohl, Joseph D. Vice President, PIMCO and PIMCO Management, Inc. Assistant
Treasurer, the Trust, PIMCO Variable Insurance Trust, PIMCO
Funds: Multi-Manager Series and PIMCO Commercial Mortgage
Securities Trust, Inc.

Hayes, Raymond C. Vice President, PIMCO, PIMCO Management, Inc. and the Trust.

Hinman, David C. Senior Vice President, PIMCO and PIMCO Management, Inc.

Hocson, Liza M. Vice President, PIMCO and PIMCO Management, Inc.

Hodge, Douglas M. Executive Vice President, PIMCO and PIMCO Management, Inc.

Holden, Brent L. Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.

Holloway, Dwight F., Jr. Senior Vice President, PIMCO and PIMCO Management, Inc.

Hudoff, Mark Senior Vice President, PIMCO and PIMCO Management, Inc.

Isberg, Margaret E. Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.; Senior Vice President of the Trust.

Kelleher, Thomas J. Vice President, PIMCO, PIMCO Management, Inc. and the Trust

Keller, James M. Senior Vice President, PIMCO and PIMCO Management, Inc.

Kennedy, Raymond G. Senior Vice President, PIMCO and PIMCO Management, Inc.

Kiesel, Mark R. Vice President, PIMCO and PIMCO Management, Inc.

Kilmer, Sharon Executive Vice President, PIMCO and PIMCO Management, Inc.
</TABLE>

-6-
<PAGE>

<TABLE>
<CAPTION>
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Kirkbaumer, Steven P. Vice President, PIMCO, PIMCO Management, Inc. and PIMCO
Variable Insurance Trust.

Loftus, John S. Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.; Vice President and Assistant Secretary,
StocksPLUS Management, Inc.

Lown, David Vice President, PIMCO and PIMCO Management, Inc.

Lyon, Laura, M. Vice President, PIMCO and PIMCO Management, Inc.

Mallegol, Andre J. Vice President, PIMCO, PIMCO Management, Inc. and the Trust.

Martin, Scott W. Vice President, PIMCO and PIMCO Management, Inc.

Martini, Michael E. Vice President, PIMCO and PIMCO Management, Inc.

Mather, Scott A. Senior Vice President, PIMCO and PIMCO Management, Inc.

Mayer, Benjamin L. Vice President, PIMCO and PIMCO Management, Inc.

McCray, Mark V. Senior Vice President, PIMCO and PIMCO Management, Inc.

McCulley, Paul A. Executive Vice President, PIMCO and PIMCO Management, Inc.

McDevitt, Joseph E. Executive Vice President, PIMCO and PIMCO Management, Inc.;
Director and Chief Executive Officer, PIMCO Global Advisors
(Europe) Limited.

Meiling, Dean S. Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.; Vice President, PIMCO Commercial Mortgage
Securities Trust, Inc.; Director, PIMCO Funds: Global Investors
Series plc and PIMCO Global Advisors (Ireland) Limited; Member,
PIMCO Partners LLC.

Metsch, Mark E. Vice President, PIMCO and PIMCO Management, Inc.

Mewbourne, Curtis Vice President, PIMCO and PIMCO Management, Inc.

Millimet, Scott Vice President, PIMCO and PIMCO Management, Inc.

Moll, Jonathan D. Vice President, PIMCO and PIMCO Management, Inc.

Monson, Kirsten S. Senior Vice President, PIMCO and PIMCO Management, Inc.
</TABLE>

-7-
<PAGE>

<TABLE>
<CAPTION>
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Muzzy, James F. Managing Director and Executive Committee Member, PIMCO;
Director and Managing Director, PIMCO Management, Inc.;
Director and Vice President, StocksPLUS Management, Inc.;
Senior Vice President, PIMCO Variable Insurance Trust; Vice
President of the Trust; Member of PIMCO Partners LLC.

Nakamura, Doris S. Vice President, PIMCO and PIMCO Management, Inc.

Nellemann, Mark D. Vice President, PIMCO and PIMCO Management, Inc.

Nguyen, Vinh T. Controller, PIMCO; Vice President and Controller, PIMCO
Advisors, Cadence Capital Management, Inc., NJF Management,
Inc., Parametric Management, Inc., StocksPLUS Management, Inc.,
PIMCO Funds Distributors LLC, PIMCO Management, Inc., PIMCO
Global Advisors LLC.

Ongaro, Douglas J. Vice President, PIMCO, PIMCO Management, Inc. and the Trust.

Otterbein, Thomas J. Senior Vice President, PIMCO and PIMCO Management, Inc.

Palghat, Kumar N. Vice President, PIMCO and PIMCO Management, Inc.

Perez, Keith Vice President, PIMCO and PIMCO Management, Inc.

Phansalker, Mohan V. Senior Vice President, Senior Legal Officer and Assistant
Secretary, PIMCO and PIMCO Management, Inc.; Vice President and
Assistant Secretary, StocksPLUS Management, Inc.

Philipp, Elizabeth M. Vice President, PIMCO and PIMCO Management, Inc.

Pittman, David J. Vice President, PIMCO, PIMCO Management, Inc. and the Trust.

Podlich, William F. III Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.; Member of Management Board, PIMCO Advisors;
Member of PIMCO Partners LLC.

Powers, William C. Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.; Senior Vice President, PIMCO Commercial
Mortgage Securities Trust, Inc.; Member of PIMCO Partners LLC.

Randall, Terry A. Vice President, PIMCO and PIMCO Management, Inc.
</TABLE>

-8-
<PAGE>

<TABLE>
<CAPTION>
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Romano, Mark Vice President, PIMCO, PIMCO Management, Inc. and the Trust

Roney, Scott L. Senior Vice President, PIMCO and PIMCO Management, Inc.;
Director and Chief Executive Officer, PIMCO Global Advisors
(Japan) Limited.

Rosborough, Michael J. Senior Vice President, PIMCO and PIMCO Management, Inc.

Rowe, Cathy T. Vice President, PIMCO and PIMCO Management, Inc.

Ruthen, Seth R. Vice President, PIMCO and PIMCO Management, Inc.

Sargent, Jeffrey M. Vice President, PIMCO, PIMCO Management, Inc. and PIMCO Funds:
Multi-Manager Series; Senior Vice President of the Trust, PIMCO
Variable Insurance Trust, and PIMCO Commercial Mortgage
Securities Trust, Inc.

Schmider, Ernest L. Managing Director and Secretary, PIMCO; Director, Managing
Director and Secretary, PIMCO Management, Inc.; Secretary,
PIMCO Partners LLC; Director and Assistant Secretary,
StocksPLUS Management, Inc.; Senior Vice President, PIMCO
Advisors.

Scholey, Leland T. Senior Vice President, PIMCO, PIMCO Management, Inc. and the
Trust.

Schulist, Stephen O. Vice President, PIMCO and PIMCO Management, Inc.

Scibisz, Iwona E. Vice President, PIMCO and PIMCO Management, Inc.

Seliga, Denise C. Vice President, PIMCO and PIMCO Management, Inc.

Seymour, Rita J. Vice President, PIMCO and PIMCO Management, Inc.

Simon, Scott Executive Vice President, PIMCO and PIMCO Management, Inc.

Sullivan, Christopher Vice President, PIMCO and PIMCO Management, Inc.

Theodore, Kyle, J. Vice President, PIMCO and PIMCO Management, Inc.

Thomas, Lee R. Managing Director, PIMCO; Director and Managing Director,
PIMCO Management, Inc.; Member PIMCO Partners LLC.
</TABLE>

-9-
<PAGE>

<TABLE>
<CAPTION>
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Thompson, William S. Jr. Chief Executive Officer, Managing Director and Executive
Committee Member, PIMCO; Director, Managing Director and Chief
Executive Officer, PIMCO Management, Inc.; Director and
President, StocksPLUS Management, Inc.; Senior Vice President
of PIMCO Variable Insurance Trust; Vice President of the Trust
and PIMCO Commercial Mortgage Securities Trust, Inc.; Member of
Management Board and Executive Committee Member, PIMCO
Advisors; Member, President and Chief Executive Officer of
PIMCO Partners LLC.

Trinidad, Ronaele K. Vice President, PIMCO and PIMCO Management, Inc.

Trosky, Benjamin L. Managing Director, PIMCO; Director and Managing Director, PIMCO
Management, Inc.; Senior Vice President, PIMCO Commercial
Mortgage Securities Trust, Inc.; Member of Management Board,
PIMCO Advisors; Member of PIMCO Partners LLC.

Tyson, Richard E. Vice President, PIMCO and PIMCO Management, Inc.

Van de Zilver, Peter A. Vice President, PIMCO and PIMCO Management, Inc.

Wantanabe, Koichi Vice President, PIMCO and PIMCO Management, Inc.; Executive
Vice President and Director, PIMCO Global Advisors (Japan)
Limited.

Wegener, Marilyn Vice President, PIMCO and PIMCO Management, Inc.

Weil, Richard M. Assistant Secretary, PIMCO, PIMCO Management, Inc., Cadence
Capital Management, and PIMCO Funds Distributors LLC; General
Counsel and Senior Vice President, PIMCO Advisors; Secretary,
Cadence Capital Management, Inc. NFJ Management, Inc.,
Parametric Management, Inc., NFJ Investment Group, Parametric
Portfolio Associates, and StocksPLUS Management, Inc.; Vice
President, PIMCO Funds: Multi-Manager Series; Senior Vice
President, General Counsel and Assistant Secretary, PIMCO
Global Advisors LLC; Senior Vice President and Assistant
Secretary, PIMCO Global Advisors (Japan) Limited.

Westhead, Paul C. Vice President, PIMCO and PIMCO Management, Inc.

Wilson, Susan Vice President, PIMCO and PIMCO Management, Inc.
</TABLE>

-10-
<PAGE>

<TABLE>
<CAPTION>
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Wood, George H. Executive Vice President, PIMCO and PIMCO Management, Inc.

Yetter, Michael A. Senior Vice President, PIMCO and PIMCO Management, Inc.

Young, David Vice President, PIMCO, PIMCO Management, Inc. and PIMCO Global
Advisors (Europe) Limited.

Zhu, Changhong Vice President, PIMCO and PIMCO Management, Inc.
</TABLE>

The address of PIMCO is 840 Newport Center Drive, Newport Beach, CA 92260.

The address of PIMCO Advisors L.P. is 800 Newport Center Drive, Newport Beach,
CA 92660.

The address of PIMCO Funds Distributors LLC is 2187 Atlantic Street, Stamford,
CT 06902.

Item 27. Principal Underwriter
- -------- ---------------------
(a) PIMCO Funds Distributors LLC (the "Distributor") serves as Distributor of
Shares of the Trust. The Distributor also acts as the principal
underwriter for PIMCO Funds: Multi-Manager Series. The Distributor is a
wholly-owned subsidiary of PIMCO Advisors.

(b)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ ----------------------- ---------------------
<S> <C> <C>
Aarts, Erik M. Vice President None

Bosch, James D. Regional Vice President None

Brennan, Deborah P. Vice President, Compliance Officer None

Clark, Timothy R. Executive Vice President None

Crean, Kelly Regional Vice President None

DeNicolo, Paul Regional Vice President None

Fessel, Jonathan P. Regional Vice President None

Fitzgerald, Robert M. Chief Financial Officer and None
Treasurer
</TABLE>

-11-
<PAGE>

Gengo, Joseph Regional Vice President None

Goldsmith, David S. Regional Vice President None

Gray, Ronald H. Regional Vice President None

Hally, Dan Regional Vice President None

Hammond, Ned Regional Vice President None

Hans, Charles Regional Vice President None

Hayes, Derek B. Vice President None

Horan, Christopher Regional Vice President None

Hooper, Kristina Vice President None

Hussey, John B. Regional Vice President None

Jobe, Stephen R. Senior Vice President None

Lynch, William E. Senior Vice President None

Maginn, Stephen Executive Vice President None

Meyer, Wayne Regional Vice President None

Meyers, Andrew J. Executive Vice President None

Murphy, George Regional Vice President None

Murphy, Kerry A. Vice President None

Moyer, Fiora N. Regional Vice President None

Neugebauer, Phil J. Senior Vice President None
</TABLE>

-12-
<PAGE>

Pearlman, Joffrey H. Regional Vice President None

Pisapia, Glynne Regional Vice President None

Poli, Frank C. Vice President, Compliance Officer None

Russo, Anne Marie Vice President None

Seymour, Christopher Regional Vice President None

Schlingheyde, Keith Regional Vice President None

Schott, Newton B., Jr. Executive Vice President/ None
Secretary, Chief
Administrative/ Legal Officer

Short, Elizabeth Vice President None

Smith Jr., Eugene M. Vice President None

Smith, Robert M. Regional Vice President None

Spear, Ellen Z. Vice President None

Spezakis, Zinovia Vice President None

Thomas, William H., Jr. Senior Vice President None

Treadway, Stephen J. Chairman, President and Chief None
Executive Officer

Troyer, Paul H. Senior Vice President None

Vlachos, Teresa Vice President None

Weil, Richard M. Assistant Secretary None

Zimmerman, Glen A. Vice President None
</TABLE>
- --------------------

-13-
<PAGE>

* The business address of all officers of the Distributor is either
2187 Atlantic Street, Stamford, CT 06902 or 800 Newport Center
Drive, Newport Beach, CA 92660.

Item 28. Location of Accounts and Records
- -------- --------------------------------

The account books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of
1940 and the Rules thereunder will be maintained at the offices of
Pacific Investment Management Company, 840 Newport Center Drive,
Newport Beach, California 92660, and Investors Fiduciary Trust
Company, 801 Pennsylvania, Kansas City, Missouri 64105.

Item 31. Management Services
- -------- -------------------

Not Applicable

Item 32. Undertakings
- -------- ------------

(a) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report
to shareholders upon request and without charge.

(b) Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a person
serving as Trustee if requested in writing to do so by the
holders of not less than 10% of the outstanding shares of
Registrant.

-14-
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the city
of Washington in the District of Columbia on the 31st day of January, 2000.

PIMCO VARIABLE INSURANCE TRUST

By:
---------------------------
R. Wesley Burns*
President

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:

Signatures Title Date
- ---------- ----- ----

- --------------------- Trustee January 31, 2000
Guilford C. Babcock*

_____________________ Trustee January 31, 2000
Thomas P. Kemp*

- --------------------- Trustee and January 31, 2000
Brent R. Harris* Chairman

- --------------------- Trustee January 31, 2000
William J. Popejoy*

_____________________ Trustee January 31, 2000
Vern O. Curtis*

- --------------------- Trustee and January 31, 2000
R. Wesley Burns* President

-15-
<PAGE>

- --------------------- Treasurer(Principal) January 31, 2000
John P. Hardaway* Financial and
Accounting Officer)

* By: /s/ Robert W. Helm
____________________
Robert W. Helm,
as attorney-in-fact

* Pursuant to powers of attorney filed as Exhibit 19 to the initial
Registration Statement on October 3, 1997.

-16-